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ARTICLE · 16 DECEMBER 2020

ESMA Recommends Liquidity Action Items For Funds

William Fry LLP
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On 13 November 2020, ESMA released its findings following the co-ordinated NCA supervisory review during February- March 2020 of liquidity in UCITS and AIFs...

IrelandFinance and Banking
Patricia Taylor
Patricia Taylor
James Phelan
James Phelan
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On 13 November 2020, ESMA released its findings following the co-ordinated NCA supervisory review during February- March 2020 of liquidity in UCITS and AIFs with large corporate debt and property exposure (Report).  The review was undertaken in response to recommendations of the ESRB for an assessment of such funds' preparedness for future redemptions and valuation shocks.  See our briefing (Central Bank Data Requests Issued to Corporate Debt & Real Estate Funds) for the background to this Report.  

Overall Findings

While ESMA acknowledges that, "overall the investment funds under review managed to maintain adequately their activities when they faced redemption pressures and episodes of valuation uncertainty" it considers that the findings "need to be interpreted with caution for many reasons" including the limitation of  market stress as a result of Central Bank actions and the identification of potential deficiencies in liquidity risk management or

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