Buy-side liquidity risk management best practices

Timothy P. Corbett and Sebastjan Smodis
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Sebastjan Smodis: Vice President, State Street Global Advisors, UK

Journal of Risk Management in Financial Institutions, 2018, vol. 11, issue 3, 207-217

Abstract: Asset management activities and liquidity risk management practices have captured the attention of regulators and investors, who have focused on the potential mismatch between the promised liquidity terms in daily dealing open-end funds and the liquidity of the underlying assets in these funds. This paper describes what State Street Global Advisors has learned over the past five years while building out a liquidity risk management framework, including best practices developed to meet fiduciary and regulatory responsibilities. A comprehensive and robust buy-side liquidity risk management framework should incorporate strong governance, real-time measurement and monitoring processes, contingency planning and product suitability reviews, supported by best-in-class liquidity risk monitoring tools and systems.

Keywords: asset management; liquidity risk management; stress testing; contingency planning; product suitability and disclosures (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2018:v:11:i:3:p:207-217

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