Share page with AddThis


Esma delivers verdict on Ucits liquidity management

Ucits liquidity managementLiquidity management of Ucits funds have largely passed scrutiny by the EU financial watchdog, but firms are warned that improvements may be needed.

The European Securities and Markets Authority (Esma) said that “in some cases” liquidity assessment before investing should be strengthened, as well as data reliability verification and internal controls.

Esma published its 2020 Common Supervisory Action of Ucits liquidity risk management this week, saying that compliance with the applicable rules was satisfactory in most cases.

Where some “adverse supervisory findings” were identified, this mainly linked to documentation, procedures and methodology.

Esma said funds houses should critically review their liquidity risk management to makes sure none of the adverse findings were in their frameworks.

The Ucits regulatory framework includes a broad range of liquidity risk management provisions which aim to ensure that investors are able to redeem their investments on request.

Steven Maijoor, Esma chair, said: “Overall, [regulators] reported that most Ucits managers have demonstrated that they have implemented and applied sufficiently sound liquidity risk management processes. However, the exercise also identified shortcomings in a few cases and the need for improvements in certain key areas.

“Consequently, NCAs are following up with market participants to address the supervisory findings identified in the CSA at the individual and collective level.”

Last year, Esma called on fund managers with significant exposure to corporate debt and real estate to be prepared for future adverse shocks. Each of the five measures proposed at the time related to liquidity, including increasing the range of liquidity management tools available.

© 2021 funds europe

Most read features

Roundtable: The digital transformation opportunity

The funds industry is looking at adopting new types of technology, from automation to ESG reporting, blockchain and tokenisation. A FundsTech roundtable in March explored how these will revolutionise the sector.

Tokenisation: The incredible potential of tokenisation

Tokenisation offers a new generation of investors access to a wide range of asset classes. But a lack of analysts is one reason why the market may not be ready for the possibilities, finds Nicholas Pratt.

Regulation: Panel calls for simplicity in ESG reporting

The industry accepts the need for more rigour in ESG fund reporting, but the work will be pointless if investors don’t understand the end result. Nicholas Pratt reports.

Cryptocurrencies: Crypto funds face long wait for regulatory approval

While crypto currencies forge onwards, access for investors who prefer to invest through regulated vehicles remains muted. A wait-and-see stance by regulators lies at the centre of this, finds Nicholas Pratt.

Managing the impact of ESG reporting

A rise in ESG reporting requirements is impacting asset managers in every conceivable way. The solution, discovers Nicholas Pratt, is to use all of this newly found data to form a closer relationship with the next generation of investors.

Sponsored Profiles

The importance of trust when building successful client-vendor teams

Petra Roche and Anna Kanior-FlorekFundTech speaks to Metrosoft’s Petra Roche and Anna Kanior-Florek about cross-organisational relationships and why mutual trust...

The digitally connected Global Transfer Agent

Anand Ramachandran, Vice President, Global Head of Solutions, Richard Clarkson, Head of Solutions, Funds and Swapnil Joshi, Senior Strategy Manager from Oracle Financial Services Global...

Data consolidation takes centre stage in asset management M&A

MergersConsolidation between asset management firms is overwhelmingly expected to increase. Operational challenges remain thanks to legacy systems. But in a recent...

Are you being microserved?

As asset managers grapple with new digital technology, FundsTech talks to Calastone’s Adam Belding about the importance of software architecture and the benefits...