Boston, MA, May 29, 2024 - Brown Brothers Harriman & Co. (BBH) announced a new automated liquidity management tool (“LMT”) for traditional and alternative funds, which allows asset managers to supervise multiple fund liquidity scenarios based on investor flows in a fully digital, customizable and controlled environment.
LMT receives real-time transactional feeds and proactively notifies asset managers in case their custom thresholds have been exceeded. LMT supports liquidity management for fund structures with liquid and illiquid assets and can be adjusted and customized to various fund cycles and cut off times.
Accessed through BBH’s client portal Infuse TA, asset managers can now simulate within LMT and manage their liquidity decisions online. Trades can be accepted as instructed or adjusted on an individual basis or at fund level, with automatic STP cancellations and new STP instructions to support the newly accepted cash flow.
LMT not only provides online projections for the fund’s liquidity needs, but it also provides asset managers with a tool to use to fulfill the growing requirements from regulators around liquidity transparency. The latest Financial Stability Board recommendations1, ELTIF 2.0 regulation2, and European Securities and Markets Authority draft regulatory technical standards3 call for well-established and documented processes using defined and tested liquidity management tools and procedures. Furthermore, the International Organization of Securities Commissions4 has prioritized LMTs as a 2024 focus area and the Central Bank of Ireland announced a thematic review and questionnaire for 20245.
“General spikes of market volatility, as well as risk of higher market volatility due to geopolitical tensions and world events such as COVID-19, have highlighted the importance of automation in liquidity management for risk mitigation and to preserve financial stability,” said Manuel Dienhart, Global Head of Transfer Agency at BBH. “LMT will offer managers a digital solution to manage their funds’ liquidity. It takes what was once a manual and risky offline process, and turns it into straight through automation, helping managers meet regulators’ expectations.”
Further driving the demand for an automated liquidity management tool is the growing interest among managers in ELTIF 2.0, LTAF and evergreen funds, which are open-ended structures that offer high net worth and retail investors exposure to private market asset classes that have traditionally been harder to access. According to BBH’s 2024 Fund Distribution Outlook survey, 50% of asset managers plan to go to market with ELTIFs and LTAFs in the next 3 years.
“Semi-liquid, open-ended structures put liquidity management into finer focus, especially through a regulatory lens when offering liquidity within a fund holding largely illiquid assets,” said Lata Vyas, Head of European Alternative Funds Product at BBH. “For asset managers, GPs and Management Companies who oversee these portfolios, establishing an appropriate redemption policy and managing the ongoing liquidity needs of a broad spectrum of investors requires tools to be in place that are visible to regulators.”
BBH’s LMT utilizes API technology and is integrated with BBH Infomediary, an open-architecture data integration and messaging engine, and currently available for Transfer Agency clients.
For more information about our Transfer Agency services, visit here.
About Brown Brothers Harriman
BBH is a privately held, global financial services firm founded in 1818 and headquartered in New York City. BBH is known for its exceptional client service, technology expertise, and customized solutions. For 200 years its client-centric approach has fostered deep and lasting relationships built on commitment and trust. As a private partnership, free from the distractions of short-term or public market expectations, BBH is built to put clients first and create success that lasts.
BBH’s Investor Services business provides asset servicing, capital markets, and operating model solutions to many of the world’s leading asset managers and financial institutions. Asset servicing solutions include cross-border custody, accounting, and administration and related services. Capital markets solutions include operational and strategic foreign exchange and securities lending services. BBH’s operating model solutions solve for platform, data, and connectivity challenges across open-architecture operating models for asset managers, asset owners, and financial institutions.
BBH operates in over 90 markets worldwide from 18 offices. BBH employs approximately 6,000 professionals. For more information, please visit www.bbh.com.
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1 FSB Revised Policy Recommendations to Address Structural Vulnerabilities from Liquidity Mismatch in Open-Ended Funds, 20 December 2023
2 Regulation (EU) 2023/606 of The European Parliament and of The Council of 15 March 2023
3 ESMA Draft regulatory technical standards under the revised ELTIF Regulation, 19 December 2023
4 OR01/24 Update to IOSCO 2023-24 Work Programme – March 2024 – March 2025 Workplan
5 Irish Funds Weekly Update – Friday 12 April 2024
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