ESMA publishes Guidelines on funds liquidity stress testing

ESMA has published stress testing Guidelines that build upon and amplify the requirements of AIFMD and UCITS Directive. The Guidelines are directed at fund managers, and will require them to stress test the assets and liabilities of their funds, including for redemption requests from investors.

They include requirements for:

• fund managers to notify national competent authorities of material risks that emerge from their stress tests, and actions to be taken to address them; and
• depositaries to verify that the fund manager has appropriate procedures in place.

The Guidelines will apply from September 2020.