In its response to IOSCO’s consultation on the revised recommendations for liquidity risk management for collective investment schemes, EFAMA welcomes the fact that IOSCO recognises aspects essential for proper risk management (e.g., asset managers’ primary responsibility and the absence of one-size-fits-all approaches). 

Nonetheless, the revised recommendations introduce regulatory requirements that often exceed what is necessary to preserve investor protection and financial stability:

• IOSCO should recognise approaches equivalent to the proposed fund categorisation (e.g., liquidity stress testing in the EU).
• IOSCO should not put such an emphasis on anti-dilution tools. While these are important liquidity management tools, it is inappropriate to seek that the industry normalises their use in day-to-day fund management or expect that asset managers should conduct a market impact assessment before each trade.
• IOSCO should ensure that its guidance does not unduly restrict the use of quantity-based liquidity management tools (e.g., by introducing a list of ‘exceptional circumstance’ or preventing the differentiated use of these tools).