In the midst of the COVID-19 crisis, liquidity risk management
is certainly a topical question, as it is meant to prepare a fund
for a crisis so that it may meet redemption requests in normal and
stressed conditions.
Circular 20/752
The Luxembourg Financial Sector Supervisory Authority (CSSF)
issued a new circular on 29 September 2020 (Circular) to integrate
the guidelines of the European Securities and Markets Authority
(ESMA) on liquidity stress testing (Guidelines), (initially
published a year before in September 2019), into the administrative
practice and regulatory approach of the CSSF.
In respect of funds, the Guidelines are relevant to all
undertakings for collective investment in transferable securities
(UCITS) and alternative investment funds (AIFs) including exchange
traded funds, with the exception of unleveraged closed-ended AIFs.
Provisions also apply to depositaries and national competent
authorities (NCAs).
