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This is an excellent article with some important guidance for MIS managers. The concept of having an LCP is one we at Mosaic have promoted as part of the discussion regarding liquidity risk management.
Among other things the article notes that “the LCP would need to be cut and tailored to fit exactly the particularities of the MIS manager’s own schemes and funds, and the types of assets and financial markets invested in, as there will be no single generic LCP that is reliably one-size-fits-all across MIS managers.” To the extent that a MIS manager’s schemes hold assets that have illiquid characteristics (e.g. exposures to private unlisted assets), then the LCP will need to contemplate those.
Recent market dynamics continue to reinforce that we live in volatile times. The source/cause of the next “liquidity crisis” whether that be at a broader market level, or specific to an asset class, is anyone’s guess but having an LCP (not unlike a BCP) at least provides a starting framework for a response in circumstances that will likely require very rapid decision making and decisive action to protect the interests of investors.
