By Liam Edwards

The FCA has issued its own statement on Liability Driven Investment following statements from The Pensions Regulator, the Central Bank of Ireland, and the Commission de Surveillance du Secteur Financier (Luxembourg).

Welcoming the statements from all three entities, the FCA noted that it has been working closely with regulators across Europe, as well as with firms which manage LDI portfolios, to secure resilience in the face of any future unexpected market fluctuation and volatility.

The FCA has said it expects asset managers to take any necessary or appropriate action following these communications and that they operate their products and services in a way that will not create risks to market integrity or financial stability. Measures such as liquidity buffers are a necessary but only partial solution and managers of LDI funds should learn lessons from recent events.

All market participants should factor recent market conditions into their risk management and should adopt a wider horizon of events that might be considered extreme but plausible.

The FCA intends to publish a further statement on good practice towards the end of Q1 2023. For further information, a copy of the FCA statement can be found here. 

For further UK financial services regulatory updates, please visit the Burges Salmon blog.