Regulatory Alerts2018-04-16
Report and Guidelines on Liquidity Stress Testing in German Asset Management Companies
BaFin issued this report following a 2017 status quo analysis to establish supervisory expectations for liquidity risk management and stress testing across German open-ended funds. The guidelines require asset management companies to align fund liquidity profiles with redemption obligations, conduct regular stress tests under normal and exceptional market conditions, and implement validated organizational frameworks to prevent liquidity spirals. Furthermore, the document mandates senior management oversight, integrated asset and liability-side risk assessments, and continuous monitoring to ensure proactive emergency prevention and systemic financial stability.
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