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ARTICLE · 18 JANUARY 2022

Stress Testing Of Funds Show They Would Largely Cope | MFSA

Finance Malta
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This study served as a follow up of the first liquidity stress testing exercise carried out by the MFSA in 2020.

MaltaFinance and Banking
Finance Malta
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Maltese retail investment funds would generally cope well under stressed market conditions, according to a study carried out by the Malta Financial Services Authority (MFSA).

This study served as a follow up of the first liquidity stress testing exercise carried out by the MFSA in 2020.

Although the 2020 liquidity stress test was based on data that preceded the COVID-19 crisis, overall, it provided a good indication of the redemption magnitudes that funds would be expected to face during such stressed market conditions.

The Authority refined the methodology used, based on its 2020 experience, and found that the liquidity risk in the Maltese retail investment fund industry remained contained, with most of the funds capable of withstanding theoretical 'extreme redemption' requests. The sample reviewed within the study consisted of 64 retail investment funds licensed in Malta, covering a total net asset value (NAV) of €2.67 billion or 88% of the total NAV of the

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