How fund boards are managing liquidity risk regulatory changes, and the impact on both the industry and end investor

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FBC’s latest Digital Meeting explores

On the 9th of March 2021, FBC hosted Overseeing Liquidity: Good Practice for Fund Boards to a packed audience of over 90 attendees.

Screenshot of the FBC Digital Meeting 9 Mar 2021

Brandon Horwitz led the Digital Event with a panel of industry experts: Emma Griffin and Michelle McGrade, both Independent Directors, and Tim Palmer, Chief Risk Officer at HSBC Global Asset Management. Attendees posed questions relating to how fund boards are tackling liquidity in the midst of changing regulation, and what changing liquidity regulation means for end investors in terms of both their understanding and outcomes. The speakers discussed how the crisis of 2008 illuminated liquidity risk issues, mobilising change within the industry to better manage risk throughout the entire investment process. 

Our panellists discussed the role of the board when it comes to overseeing liquidity risk in that it is the responsibility of the board is to think about the business having clear systems and controls and a liquidity risk management framework with a focus on how they monitor the effectiveness of these controls, without getting bogged down in minutiae which are for the business to monitor in detail day-to-day. There was also a general view that SMCR had not changed fund director behaviours significantly, with those in the role being very aware of their fiduciary responsibilities. 

The bottom-line focus for our boards, according to our panellists, is that best practices in managing liquidity risk of funds is just good risk management in general, and that liquidity risks must be clearly explained to clients and taken into account in developing investment products. There was also an acknowledgement that while the FCA has clear requirements for regulatory returns relating to liquidity risk, requirements in other jurisdictions vary and consistency would help reduce time and costs to produce this information.

FBC Members will have access to both a full video replay of the meeting and a Podcast through their Member Portal. Non-Members can access the first 15 minutes of the event through Apple Podcasts, Audible or Spotify.

Additionally, if you’d like to take part in FBC’s future meetings, please take a look at our upcoming event calendar.  Of note, is the upcoming 2021 iNED Bootcamp running from the 19th – 22nd of April. This specific event is open to both Members and Non-Members but registration is essential, as it is the only way to access content.