The International Organization of Securities Commissions (IOSCO) has published the following final reports:

  • Recommendations for Liquidity Risk Management for Collective Investment Schemes. This final report replaces the liquidity risk management framework contained in IOSCO’s 2013 report Principles of Liquidity Risk Management for Collective Investment Schemes. The final report sets out IOSCO’s recommendations to entities responsible for managing the liquidity of collective investment schemes (responsible entities) to ensure that liquidity is managed to safeguard and protect the interests of investors, including in stressed market conditions. In addition to its recommendations to responsible entities, the final report includes IOSCO’s additional guidance to securities regulators to promote good liquidity management practices for collective investment schemes. IOSCO expects that securities regulators will actively promote the recommendations’ implementation by responsible entities. However, IOSCO also recognises that when the recommendations are being implemented, they have to be transposed within the context of the specific legal structures prevailing in each jurisdiction. Therefore the implementation of the recommendations may vary from jurisdiction to jurisdiction, depending on local conditions and circumstances. Following the adoption of the recommendations and once a suitable period of time for initial implementation has passed (e.g. 2-3 years), IOSCO intends to assess implementation across jurisdictions; and
  • Open-ended Fund Liquidity and Risk Management – Good Practices and Issues for Consideration. This final report provides practical information on measures that may be taken to address liquidity risk management. Topics covered include: ensuring consistency between a fund’s redemption terms and its investment strategy; liquidity risk management tools; and stress testing. When implementing the recommendations on liquidity risk management (see above), the good practices in this final report will provide responsible entities with a useful reference point against which to assess whether their own practices follow a similar approach, or to the extent that they vary, whether they can achieve similar outcomes, and furthermore assist with evolving the most effective approach to the responsible management of liquidity.

View IOSCO issues recommendations and good practices to improve liquidity risk management for investment funds, 1 February 2018