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Publication of recommendations on the liquidity risk of investment funds

18/01/2018

On 1 February 2018, the International Organization of Securities Commissions (IOSCO) published its final recommendations to improve liquidity risk management practices in open mutual funds.

On 1 February 2018, the International Organization of Securities Commissions (IOSCO) published its final recommendations to improve liquidity risk management practices in open mutual funds. The objective for these funds is to ensure the liquidity stated to the investor in respect of the fundamental principles of equality of shareholder treatment and market integrity. The appearance of a significant delay between asset liquidity and share redemption conditions may in effect incur a higher or lower liquidity risk for the management company who must then be able to have the broadest range of tools possible such as temporary capping of repurchases or swing pricing.