Buy-side liquidity risk management best practices
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.
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Author's Biography
Timothy P. Corbett is a Senior Managing Director and Global Head of State Street Global Advisors Investment and Liquidity Risk Management. He also serves as a member of State Street’s senior leadership team and is a member of the Investment Committee. Prior to joining the investment risk team in 2008, Tim was a senior portfolio manager responsible for global fundamental equity products. Tim joined the firm in 1996 and has focused on risk analysis, portfolio construction, equity research and portfolio management. Tim holds a BS in finance from Boston College, an MBA from Bentley University and an MS in corporate finance from Bentley.
Sebastjan Smodis is a Vice President and Global Head of State Street Global Advisors Liquidity Risk Management, and is responsible for ensuring a robust liquidity risk management framework and governance across the organisation. He also chairs the SSGA Liquidity Committee and is a member of the State Street Country Risk Committee. Before that he was a Senior Investment Risk Manager responsible for risk oversight across Europe Middle East and Africa (EMEA) fixed income, liability driven investment (LDI) and multi-asset class portfolios. Sebastjan holds a post-experience Masters in Finance degree from London Business School and has earned the Chartered Financial Analyst (CFA) charter and Global Association of Risk Professionals (GARP) Financial Risk Manager (FRM) certificate.
Citation
Corbett, Timothy P. and Smodis, Sebastjan (2018, August 1). Buy-side liquidity risk management best practices. In the Journal of Risk Management in Financial Institutions, Volume 11, Issue 3. https://doi.org/10.69554/WQRM9160.
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