The International Organization of Securities Commissions (IOSCO) has published a final report, Liquidity management tools in collective investment schemes: results from an IOSCO Committee 5 survey to members, that maps existing liquidity management frameworks in 26 member jurisdictions with a particular focus on tools to help deal with exceptional situations.
The final report highlights, among other things, the following observations:
- many liquidity management tools are available to jurisdictions, some of which are specifically tailored to the features and nature of the funds considered (e.g., money market funds, real estate funds, hedge funds). In particular, most jurisdictions clearly distinguish open-ended schemes from closed-ended ones;
- the most common tools are redemptions fees, redemptions gates, redemptions in kind, side pockets and suspension of redemptions;
- funds are generally required to have appropriate risk management and internal quality controls to ensure that all material risks are properly identified, assessed, monitored and controlled; and
- open-ended funds are generally subject to additional regulatory requirements dealing with fund leverage, asset concentration, investor concentration, restrictions on illiquid asset investment and short-term borrowings.
View IOSCO publishes report on liquidity management tools in CIS, 17 December 2015