Indisputably, liquidity risk is not a new topic in asset management. From a regulatory perspective, both UCITS and AIFM Directives release a set of requirements in relation to liquidity management which are designed to mitigate this risk. AIFM Directive, for instance, includes requirements and recommendations to the fund managers to put in place liquidity management processes and stress tests, especially for open-ended or leveraged funds. 

Liquidity risk is subject to special attention and ongoing regulatory developments by regulators and supervisory authorities. We particularly refer to the liquidity risk management recommendations for investment funds published on July 18th, 2019 by the International Organization of Securities Commissions (IOSCO). The European Securities and Markets Authority (ESMA) also strongly focused on fund liquidity developments with, firstly, the overall markets understanding of risks, including the liquidity risk, via the data collected in the AIFMD reporting, which led to the publication of the first AIFMD statistical report on March 7th, 2019.

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