FundRock expands liquidity management service for asset managers

FundRock rolls out holistic liquidity management service to assist asset managers during the Covid-19 crisis and to prepare them for new European regulations

FundRock Management Company S.A. (“FundRock”), a leading European third-party UCITS Management Company (“ManCo”) and Alternative Investment Fund Manager (“AIFM”), today launches a new unbundled service to assist asset management firms in managing the liquidity of their portfolios during the Covid-19 crisis and over the long term.

The rollout of the service - believed to be a first for an independent pan-European third-party ManCo and AIFM provider - is available to EU and non- EU asset managers managing EU funds for which FundRock is not acting as ManCo/AIFM. Its launch comes as regulators globally prepare to implement new guidelines for liquidity management.

FundRock’s large team of risk management specialists will work with portfolio managers and fund directors to monitor the liquidity of funds across all jurisdictions globally. The team’s analysis will rapidly determine how quickly assets could be sold, the value of those assets and transaction costs that would be incurred. The analysis will confirm what, if any, liquidity management tools should be invoked. FundRock also will carry out additional stress testing of the portfolio.

In addition, at a time when regulators including competent authorities in Luxembourg and Ireland are requesting regular liquidity management reports from managers, the new unbundled service will ensure that data developed from FundRock’s independent portfolio liquidity monitoring and reporting can be easily integrated into the new regulatory reporting templates.

“The Covid-19 crisis has highlighted once again the vital importance of liquidity management to asset managers, investors and capital markets,” said Xavier Parain, CEO of FundRock. “Policymakers and regulators recognise that asset managers should develop, test and where necessary deploy liquidity management tools, and our service will provide them with the data and analytics to enable them to make the most informed and timely decisions possible. This ultimately will preserve capital, benefiting fund investors, and will help regulators mitigate systemic risks.”

The adoption by asset managers of new liquidity management guidelines, developed by the International Organization of Securities Commission (“IOSCO”), the global association of securities and futures market regulators, will become a regulatory requirement in the European Union from September 2020 under rules being implemented by the European Securities and Markets Authority (“ESMA”).

The impact of the Covid-19 crisis on portfolio liquidity means that many hedge fund managers, private equity firms, real estate investment managers and other asset managers are intending to comply with the guidelines well before September, said FundRock.