ESMA Common Supervisory Action on UCITS Liquidity Risk Management

In the course of 2020 the European Securities and Markets Authority (ESMA) performed a Common Supervisory Action (CSA) with national competent authorities (NCAs) across the EU/EEA on the supervision of UCITS managers’ liquidity risk management.

On 24 March 2021, ESMA published the results of the CSA in a Public Statement, including the experiences and findings of all 30 EU/EEA NCAs (including the CSSF) participating to the exercise. ESMA informed in that context that the overall level of compliance with the applicable rules on LRM was satisfactory for most UCITS managers, but that the exercise also showed shortcomings in some areas and the need for improvements in certain key areas.

While the overall analysis of compliance for IFM in Luxembourg is consistent with the conclusions of ESMA, the CSSF would like to inform market participants about the publication of the report “CSSF Feedback Report – ESMA Common Supervisory Action on UCITS Liquidity Risk Management” which presents the main observations made by the CSSF in the context of the CSA together with the related recommendations for improvements in view of the applicable regulatory requirements.

The CSSF is currently engaging on a bilateral basis with IFM in relation to the observations made in the context of the CSA exercise, thereby asking these IFM to implement the necessary corrective measures for the shortcomings observed.

In addition, the CSSF asks hereby all UCITS managers to conduct, by the end of 2021, a comprehensive assessment with regard to the compliance of their liquidity risk management set-ups in relation to the observations of ESMA and of the CSSF and to take, if applicable, the necessary corrective measures.