On 30 January 2020, the European Securities and Markets Authority (ESMA) has launched, in accordance with the announcement hereafter, a Common Supervisory Action (CSA) with national competent authorities (NCAs) on the supervision of UCITS’ managers liquidity risk management across the European Union:
The UCITS framework includes a broad range of regulatory provisions aimed at ensuring that all relevant risks, including liquidity risks, are identified, measured, monitored and effectively managed in order to ensure that UCITS investors can redeem their investments at request. Compliance with the UCITS liquidity risk management rules is key to ensure financial stability, investor protection and the orderly functioning of financial markets. To this aim, ESMA has launched the CSA with a view to assessing whether market participants adhere to those rules in practice. This is done on the basis of a common methodology developed at the level of ESMA.
The Common Supervisory Action (CSA) is a two-stage process where:
- in the first stage, NCAs will request quantitative data from a large majority of UCITS managers based in their respective Member States to get an overview of the supervisory risks faced;
- in the second stage, NCAs will focus on a sample of UCITS managers and UCITS to carry out more in-depth supervisory analyses.
In this context, the CSSF launched on 10 February 2020 the first stage of the Common Supervisory Action (CSA) by asking a large sample of Luxembourg-based UCITS managers to complete, by 13 March 2020 at the latest, a dedicated questionnaire for all UCITS managed, i.e. Luxembourg domiciled UCITS and foreign domiciled UCITS. All concerned Luxembourg-based UCITS managers were contacted by the CSSF in that context.
In order to benefit from a secured exchange platform and pre-submission data quality checks, the response questionnaire will have to be submitted by the UCITS managers through the CSSF’s eDesk portal. For that purpose, a dedicated section to complete this questionnaire will be accessible in the eDesk portal shortly.
The industry will be duly informed once this section, together with additional guidance, will be available for use. Any complementary guidance from ESMA that may become available in that context will also be included in that user guide and updated accordingly.