UCITS Eligible Assets

Assessing Liquidity

Regulation 4(2)(b) of the Central Bank UCITS Regulations provides that a responsible person shall “assess (and document this assessment in writing), by reference to the factors specified in this sub-paragraph at a minimum, the liquidity risk of a transferable security when investing in any transferable security”. In undertaking this assessment, the responsible person may need to consider, where necessary, an independent analysis of bid and offer prices over a period of time as this may indicate the relative liquidity and marketability of the instrument. The comparability of available prices may also indicate this.
Where a transferable security is assessed as being insufficiently liquid to meet foreseeable redemption requests, that transferable security may only be bought or held if there are sufficiently liquid securities in the portfolio for the purpose of complying with Regulation 104(1) of the UCITS Regulations.
The fact that any factor that is mentioned in Regulation 6(2) of the Central Bank UCITS Regulations is not fulfilled does not necessarily mean that the relevant instrument is non-liquid. However, the responsible person should ensure that it has sufficient information for the purpose of structuring the portfolio and foreseeing cash flows such that it can match anticipated cash flows with the selling of appropriately liquid instruments in the portfolio to meet those demands.

Information concerning the bonds considered as eligible investments for UCITS in accordance with Regulation 70(3)(a) of the UCITS Regulations is available from:

Issued: 5 October 2015

Latest revision: 5 October 2015