Recommendation on liquidity risks in investment funds


On 15 June 2020, the European Union published the European Systemic Risk Board (ESRB) Recommendation of 6 May 2020 on liquidity risks in investment funds.

This Recommendation seeks to enhance preparedness for possible future adverse shocks that could bring about a liquidity deterioration on financial markets, with potential negative implications for financial stability conditions in the Union.

It is thus recommended that the European Securities and Markets Authority (ESMA) liaise with the competent national authorities to carry out a targeted monitoring exercise with investment funds that have significant exposure to corporate debt and real estate assets, in order to assess the preparedness of these two segments of the investment fund industry for possible future adverse shocks, including any potential resurgence of mass redemptions and/or increased market price volatility.

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