The Challenges of Liquidity Stress Testing
It seems that ‘liquidity risk’ is the prevalent term on everyone’s lips these days. Following a turbulent 2019, with several high-profile fund suspensions, it is perhaps no surprise that liquidity is a 2020 priority for most regulators. The fund suspensions compounded with the ESMA’s Liquidity Stress Tests (LST) Guideline coming into force 30 September 2020 and the recent launch of a common supervisory action (CSA) on UCITS liquidity risk management demonstrate why liquidity risk is on every fund manager’s priority list.