Welcome to the September 2019 edition of our monthly update from the Asset Management & Investment Funds team.

In this month’s edition we examine ESMA’s guidelines for liquidity stress testing by investment funds which were published on 2 September along with other topical updates.  ESMA’s guidelines apply to UCITS managers and AIFMs (16 of the 18 guidelines apply to managers), depositaries and National Competent Authorities.  Currently, both UCITS managers and AIFMs are, under their respective legislative regimes, subject to liquidity risk management requirements which include obligations, in the case of AIFMs, to regularly conduct stress tests and, for UCITS managers to do so “where appropriate”.

The Guidelines, which ESMA published in response to a recommendation from the European Systemic Risk Board, detail practices to be followed by UCITS managers and AIFMs in conducting such stress testing of both assets and liabilities of funds under management.  The publication of the guidelines was preceded by a consultation process which drew over 30 responses from industry and a summary of this feedback received by ESMA was published along with the guidelines on 2 September.

Notwithstanding a significant majority of industry suggesting a lengthy implementation period of up to 24 months, the Guidelines are set to apply to both in respect of new and existing funds from 30 September 2020.

Please click here or on the image below to access the full update.

Contributed by: Nessa Joyce