On 13th November 2020, The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published a Report on the preparedness of investment funds with significant exposures to corporate debt and real estate assets, for potential future adverse liquidity and valuation shocks. The Report identifies five priority areas for action which would enhance the preparedness of these fund categories.

The ESMA Ran a supervisory exercise in relation to the ESRB Recommendation on Liquidity Risk in Investment Funds.

The result have been published :

https://www.esma.europa.eu/press-news/esma-news/esma-tells-fund-managers-improve-readiness-future-adverse-shocks

Five priorities have been identified to enhance the preparedness of the funds and relate to the following topics:

1. Ongoing supervision of the alignment of the funds’ investment strategy, liquidity profile and redemption policy;
2. Ongoing supervision of liquidity risk assessment;
3. Fund liquidity profile reporting;
4. Increase of the availability and use of LMTs; and
5. Supervision of valuation processes in a context of valuation uncertainty.