Global financial markets have continued to sell off in recent
days as fears surrounding COVID-19 continue to mount. Against this
backdrop, asset managers’ focus has inevitably shifted to
liquidity management processes and business continuity
arrangements.
Liquidity management
Global concerns have grown since the outbreak of COVID-19,
rattling investors and markets worldwide. This has led to a steady
flow of redemption requests from investors, triggering asset
managers to update their liquidity management processes and stress
test portfolios in order to ensure that fund portfolios are
sufficiently liquid in order meet redemptions.
Gating mechanisms could prove particularly useful in order to
cope with heavy redemption flows; indeed, if faced with liquidity
problems, market players – UCITS management companies and
AIFMs alike – ought to consider introducing gating mechanisms
in fund offering documents in order to allow themselves headroom to
limit redemptions to a
