The reason why the Money Market Fund Regulation requires funds to know their investors (Know Your Customer extends to Know Your Investor) is the trigger effects of redemptions. This is captured in one neat graphic you can use! #concentrationrisk #stresstest #redemptioncrisis #liquiditycrisis #moneymarkets #contagion #KYC #knowyourinvestor #financialstability #fsb #ESMA #ACT #Treasurers #MMFR #MMFreform #MMFRegulation #compliance #regtech #financialregulation, #Training #regul
Being aware of the nature of your investor and how concentrated the holding is among investors, is one of the implicit or explicit asks of the Money Market Fund Regulation. That is because redemption by a few investors of significant heft can cause a fund to sell assets to raise cash and meet the redemptions. But the resultant drop in asset prices can cause a conflagration and contagion which is what regulation seeks to control or limit. Let us to UCITS, commonly known as mut
Liquidity in normal circumstances and in stressed ones are at the core of the Money Market Fund Regulation. How much of the portfolio can be released to meet redemption requests? That is the central question. When initial apprehension sets in, the first phenomenon is a run on the Fund. That would be quite similar to a run on a bank. These “runs” can become full-fledged routs leading to contagion. Regulation has in many ways, across sectors, moved away from simply preventing f
Imagine having a top-end investor in one of the Funds you run. Winning that account was a dream for the salesperson that aced it. Imagine that investor having a 100 million dollars in that Fund. Imagine that investor needing the money instantly. And if the name of the investor is Enron… You get the picture. A Fund Manager might instinctively realise the risk posed by that large investor. But it really is a Catch-22. Salesperson hunger for and hanker after such large clients.