MFA Comment Letter on IOSCO Consultation on Liquidity Risk Management

MFA submitted a comment letter to IOSCO in response to IOSCO’s Consultation Paper on Principles of Liquidity Risk Management for Collective Investment Schemes.  In the letter, MFA expressed support for the principles proposed by IOSCO, but expressed concerns with some of the accompanying discussion points and recommendations following the principles.  Among other things, MFA encouraged IOSCO to: (1) distinguish between the various regular liquidity risk management tools used by hedge funds and so-called “exceptional measures,” particularly in light of the recommendation that funds generally should avoid using exceptional measures; (2) modify its recommendations regarding governance to reflect important differences in hedge fund manager structures; and (3) modify recommendations regarding ongoing monitoring and measuring of liquidity risks to provide guidance that is designed to ensure liquidity risk management is incorporated appropriately into the investment and distribution activities of funds, without creating overly burdensome requirements that would be difficult or impossible for many fund managers to apply.