Navigating the Shifting Regulatory Landscape with Fusion by J.P. Morgan

Read J.P. Morgan's report, Navigating liquidity risk in investment funds:

Global regulatory developments

Liquidity risk has become a top priority for global regulators, particularly with the increasing influence of Non-Bank Financial Intermediaries (NBFIs) on financial stability. Recent events, such as the COVID-19 pandemic and the UK gilt market crisis, have accelerated the development of policies aimed at mitigating systemic risks. The European Systemic Risk Board (ESRB) has expanded its monitoring framework to include NBFIs, emphasizing the need to address both funding and market liquidity.

International standards and policies

Internationally, the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) have revised their recommendations to tackle liquidity mismatches in Open-End Funds (OEFs). Meanwhile, the European Union, along with countries like Ireland and Luxembourg, is actively enhancing macroprudential frameworks to improve liquidity management within investment funds.

US and UK regulatory initiatives

In the U.S., the Securities and Exchange Commission (SEC) has proposed amendments to strengthen liquidity risk management for mutual funds and ETFs. Similarly, the UK Financial Conduct Authority (FCA) continues to prioritize liquidity management in OEFs, with ongoing reviews and consultations.

J.P. Morgan Securities Services’ solutions

J.P. Morgan Securities Services is at the forefront of providing comprehensive solutions to support clients in managing liquidity risk effectively. Our offerings include Fund Accounting, Transfer Agency, Depositary Services and the Fusion Risk Anti-Dilution Analytics Service, developed in collaboration with MSCI. These services are designed to help clients meet regulatory requirements, manage transaction costs and ensure robust liquidity management.

Looking ahead

As liquidity risk management remains a key focus for regulators, fund managers can expect intensified scrutiny of their practices. J.P. Morgan Securities Services is committed to partnering with clients to develop tailored solutions and navigate the complexities of this evolving regulatory environment.