MAS to evaluate need to review asset managers’ liquidity risk management framework: Chia Der Jiun

The Monetary Authority of Singapore (MAS) will study the need to review the present framework for liquidity risk management by asset managers, its managing director Chia Der Jiun said.

He added that the financial regulator will “engage when the industry is ready”, especially since products of asset managers help with portfolio diversification, and serve savings and retirement needs of the region.

This comes as global regulatory bodies, such as the Financial Stability Board and International Organization of Securities Commissions, make calls to reinforce consistency between the funds’ investment strategy and liquidity of fund assets, with redemption terms.

The aim of this move is to enhance the resilience of the space in normal and stressed market conditions.

Chia was speaking at the Investment Management Association of Singapore Investment Conference 2025 on Wednesday (Apr 23). This is the 28th iteration of the conference, which was held at Parkroyal Collection Marina Bay.

On the topic of the products which asset managers build and deliver, Chia stressed the need to “run regular stress testing on (their) portfolio risks”, when volatility spikes and correlations break down.

“Funds should stress your ability to handle redemption spikes amid adverse market conditions,” he said, addressing asset managers at the conference.

Chia noted that product distributors and providers should also ensure that marketing and advertisements are “fair and balanced”.

“Marketing should not overemphasise product features that are not sustainable across a robust range of scenarios,” he added. “A sudden withdrawal of such product features could cause a loss of confidence and a redemption spike.”

Building more resilient markets

Both regulators and market participants have a part to play in contributing towards resilient markets, noted Chia.

He pointed out that market infrastructure operators also have a role in this, where trading venues should be liquidity-enhancing rather than liquidity-fragmenting. “Margin requirements should be set at levels that avoid amplifying funding stresses.”

Crowded leveraged trades are vulnerable to changing policy, economic and market conditions, he said. “Market resilience is better assured through a diversity of market participants, employing a myriad of strategies which provides depth and two-way flows.”

The theme of the conference for this year was “Navigating an Evolving Landscape” – in light of how investors today face a period of heightened uncertainty in the global economy and volatility in financial markets, due to recent shifts in trade policy and geopolitical strategy.

“(At this time), MAS is closely watching that Singapore’s foreign exchange and Singapore dollar money markets continue to function in an orderly manner,” noted Chia. “We also monitor the functionality of key funding markets in coordination with central banks globally.”

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