EFAMA welcomes the IOSCO Consultation report which we believe is a good starting point for further engagement with our industry on dilution in Open-Ended Funds (OEFs). We believe that dilution may indeed trigger investor protection concerns for certain funds and welcome, in this respect, IOSCO’s commitment to protect end-investors from material dilution. This being said, we however do not support the consultation report’s significant emphasis on financial stability considerations.
Financial stability
At the international level the FSB, together with IOSCO, are responsible for implementing policies that address structural vulnerabilities arising from asset management activities. Several regulatory actions have been taken to ensure the resilience of the asset management sector since the global financial crisis. The EU’s current risk management regime has recently been put to the test by the Covid-19-led market stress, proving its overall resilience.
Future regulation should be targeted, risk-based and reflect the differing risk profiles of Non-Bank Financial Institutions (NBFI) entities and activities. EFAMA and its members are committed to working closely with international and European regulators on the ongoing improvement of investment funds’ existing risk management framework, and to foster the development of best practices within the investment management industry.
Related policy positions
Policy Position
International agenda
Financial stability
04 September 2023
IOSCO Consultation Report on anti-dilution liquidity management tools
Policy Position
International agenda
Financial stability
04 September 2023
FSB Consultation Report on addressing vulnerabilities from liquidity mismatch in open-ended funds
EFAMA welcomes the opportunity of this consultation report to share views on how regulators could foster greater consistency in the management of liquidity risks in the Open-Ended Funds (OEFs) sector and on how the FSB should proceed in the future to evaluate any potential build-up of systemic risks in capital markets.
Policy Position
International agenda
Management Companies
Financial stability
22 April 2021
EFAMA's and ICMA’s AMIC joint response on fund liquidity management by open-ended funds to IOSCO
ICMA’s AMIC and EFAMA have submitted a joint response to the IOSCO consultation on fund liquidity management by open-ended funds.
The response highlights how industry practices and existing regulatory provisions in Europe are well aligned with the Liquidity Risk Management (LRM) recommendations issued by IOSCO in 2018 (Annex 1).
Related news
Policy Position
Management Companies
Financial stability
20 June 2024
FSB consultation on liquidity preparedness for margin calls in non-bank financial intermediation
EFAMA agrees with the FSB that market participants should integrate the management of margin and collateral calls into their risk management, governance, and operational processes.
Press Release
Financial stability
05 September 2023
Don’t add complexity to fund liquidity management rules without clear added benefits, says EFAMA
Protecting long-term investors from material dilution is a legitimate objective, however, EFAMA doubts that the FSB draft proposals on structural vulnerabilities in the open-ended fund (OEF) sector and the IOSCO ones on anti-dilution liquidity management tools (LMTs) would increase the resilience of the OEF sector. In our view, this framework would add unnecessary complexity to liquidity risk management and, ultimately, result in higher costs for end-investors with little benefit.
Policy Position
International agenda
Financial stability
04 September 2023
IOSCO Consultation Report on anti-dilution liquidity management tools
EFAMA welcomes the IOSCO Consultation report which we believe is a good starting point for further engagement with our industry on dilution in Open-Ended Funds (OEFs). We believe that dilution may indeed trigger investor protection concerns for certain funds and welcome, in this respect, IOSCO’s commitment to protect end-investors from material dilution. This being said, we however do not support the consultation report’s significant emphasis on financial stability considerations.
Related publications
Publication
Management Companies
Financial stability
08 January 2019
Joint EFAMA & AMIC report on liquidity stress tests in investment funds - January 2019
Publication
Financial stability
24 June 2012
Solvency II: Data Impacts on Asset Management
The report highlights the need for the asset management industry to proactively work with European insurance companies to respond to the strategic changes caused by the Solvency II Directive.
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