Countries urged to act on fund liquidity

Liquid alternativesKey asset management and capital market groups have called on countries to make as many market-based tools available as they can to support fund liquidity. The groups, including the International Capital Market Association (ICMA), made the recommendation in a report written in response to public concerns that funds might not be able to meet redemption demands in difficult market conditions. Market tools, such as swing pricing, are not always used across EU jurisdictions. For example, swing pricing is not available to funds in Belgium, Germany and Spain. Other examples that the ICMA, the European Fund and Asset Management Association (Efama) and the Asset Management and Investors Council give of market-based liquidity measures include dilution levy, ‘dual pricing’ (redemption fees), side pockets and suspension of redemptions. The report, called ‘Managing fund liquidity risk in Europe’ has been produced after worries that the reduced presence of banks acting as dealers in capital markets would affect liquidity, especially in the bond markets. Post-crisis regulation like Basel III and the structural shift caused are behind this. Martin Scheck, chief executive of the ICMA, said the report showed that there is a “comprehensive framework already in place available to managers to manage liquidity in difficult market conditions, through a combination of regulatory requirements and market-based tools”. ©2016 funds europe

Sponsored articles

Mar 16, 2017

Portfolio Manager Davide Cataldo discusses the results of the Pioneer Investments’ survey on liquid alternatives and how investors can be encouraged to increase their allocation.

Mar 16, 2017

Heightened margin requirements for cleared and uncleared OTC derivatives pose a challenge for legitimate hedging activities and are driving financial institutions to explore alternative hedging...

Mar 16, 2017

Blockchain aims to radically change the way investors can access funds, says Olivier Portenseigne, Managing Director and Chief Commercial Officer of Fundsquare.

Mar 16, 2017

Greater efficiency must be embraced to ensure regulatory changes do not destroy choice for fund buyers, says Bernard Tancré of Clearstream.

Executive Interviews

CEO INTERVIEW: Munro gains three-year track record

Mar 16, 2017

Aviva Investors’ annual results this month were the third set since Euan Munro took over as CEO. Nick Fitzpatrick speaks to him about the ‘Aims’ fund at the heart of the firm’s outcome strategy.

DISTRIBUTION INTERVIEW: Tales of the unexpected

Mar 16, 2017

Laurence Terryn, a fund selector at Candriam, tells David Stevenson how the twists and turns of the past year’s macro environment flavoured her approach to fund selection.



Mar 07, 2017

Funds Europe speaks to leading Luxembourg industry figures about the growing regulatory demands on asset servicers and how to remain profitable in spite of major investments in technology.

SEC LENDING ROUNDTABLE: Both a borrower and a lender be

Jan 11, 2017

Industry heavyweights, including agent lenders, discuss issues affecting the securities lending sector such as regulation and the types of collateral being used.