CBI Issues UCITS Liquidity Risk Management Dear CEO Letter26 May 2021
Early 2020 the Central Bank commenced an ESMA driven CSA focusing on UCITS liquidity risk management (LRM), with the purpose of the CSA to assess UCITS FMC’s compliance with their LRM obligations. The Bank's findings were submitted to ESMA in late 2020 and ESMA’s results were published in a public statement in late March.
The Central Bank has now issued a Dear CEO letter to all Irish authorised UCITS managers which elaborates on some of the results from the ESMA UCITS liquidity risk management CSA and highlights 9 particular areas for attention. The Central Bank have highlighted that this letter should be read in conjunction with the ESMA public statement and the results of the implementation of the ESRB recommendations and the CBI letter issued to UCITS managers in the context of that exercise.
UCITS managers are required to “conduct a specific review of their practices, documentation, systems and controls by reference to the findings in the ESMA public statement and this letter”. The review should be completed, along with an action plan approved by the board of each UCITS manager by the end of Q4 2021.