May 1, 2024

FMA: Liquidity Risk Management

The FMA have made their expectations in regards to liquidity much clearer.

The FMA has announced (23/4/24) new guidelines for fund managers in regards to liquidity risk management. Falling short of prescribing actions it makes clear that managers and supervisors have clear statutory duties and that all managed funds should have appropriate liquidity risk management policies, processes and tools.

John Horner, FMA Director of Markets, Investors and Reporting, said: “Effective liquidity risk management is a fundamental capability managers need to implement, maintain and enhance. Failure to do so may breach the law.”

Our secondary markets provide independent smart-tech that support managers in meeting the FMA guidelines. Leading with fairness and transparency investors and managers both stand to benefit.

Our liquidity mechanisms include our continuous and periodic market. The continuous market allows participating investors to experience better price discovery and liquidity, trading assets anytime, anywhere, with managers providing continuous disclosure. The periodic market operates in a set timeframe (from a few hours to a couple of days) thereby focusing investor trading desires on a limited number of liquidity opportunities, e.g, monthly, quarterly, semi-annually, which has the natural tendency of creating investment tension and consequently higher levels of participation.

Both markets are mature and are used by some of the largest financial firms in Australasia, companies with a market cap ranging from $20-850 million.

Liquidity has long been elusive in the private markets. It need not be. Syndex tools are disrupting the status quo to bring tangible fairness and transparency that is heralded by investors, managers and lawmakers alike.

To read the FMA guidelines click here.

Ross Verry

Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.

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