The International Organization of Securities Commissions ("IOSCO") proposed recommendations and examples of good practices in relation to liquidity management for open-ended collective investment schemes ("CIS"). These recommendations and examples appear in two Reports: (i) Consultation on CIS Liquidity Risk Management Recommendations ("Consultation Report") and (ii) Open-ended Fund Liquidity and Risk Management – Good Practices and Issues for Consideration ("Good Practices Report").
The Consultation Report follows and builds on a 2013 Report published by IOSCO which evaluated the regulatory environment and industry practices regarding liquidity risk management. Since then, IOSCO has actively engaged with the Financial Stability Board in an analysis of the potential systemic risks arising in relation to the liquidity risk management of CIS, among other matters. The Consultation Report provides recommendations related to disclosures to investors, stress testing at the fund level, contingency planning, the role of data in conducting liquidity risk evaluations, appropriateness of subscription and dealing arrangements and dealing frequency considerations.
The Good Practices Report provides information meant to be utilized by (i) investors, to recognize when firms can be expected to use risk management tools, (ii) regulators, as a reference to observe liquidity risk regulation in different jurisdictions, and (iii) industry members, to demonstrate past examples of good risk management practices and effective employment of risk management tools, and to provide guidance for future risk management strategies.
Comments on the two reports must be submitted by September 18, 2017.
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