The Canadian Securities Administrators (CSA) has published proposed amendments to its investment fund rule framework to strengthen liquidity risk management (LRM) requirements for all investment funds, including non-reporting issuer funds, alongside a consultation paper seeking views on further potential reforms. The proposed changes focus on codifying and tightening expectations around fund LRM frameworks, operational controls, and governance oversight. Under the proposals, each fund would be required to establish and maintain an LRM framework supported by written policies and procedures. Operational requirements would extend from fund design through ongoing management, including aligning investment objectives, strategies and redemption frequency with expected portfolio liquidity and redemption activity, monitoring liquidity profiles using qualitative and quantitative metrics, setting liquidity thresholds and targets, conducting liquidity stress tests at least quarterly in normal conditions and more frequently in stressed conditions, assessing the liquidity impact of portfolio transactions, and maintaining and periodically testing liquidity contingency plans. Funds would also need to appoint an LRM supervisor or establish an LRM committee, with prescribed involvement of the investment fund manager’s chief compliance officer (or direct reports) and specified approval and review responsibilities. The CSA’s consultation paper asks for feedback on whether to permit or require additional liquidity management tools, a potential liquidity classification framework for portfolio assets, and enhanced public disclosure and confidential reporting to regulators. Comments on both the proposed amendments and consultation paper are due by March 27, 2026, and the CSA indicates that any resulting additional rule changes stemming from the consultation paper would be subject to a further public comment process; if approved, the proposed amendments would come into force three months after final publication.
Canadian Securities Administrators 2025-11-27
Canadian Securities Administrators launch consultation on proposed liquidity risk management and stress-testing rules for all investment funds
The Canadian Securities Administrators (CSA) proposed amendments to enhance liquidity risk management (LRM) for all investment funds, including non-reporting issuer funds. The proposals require funds to establish LRM frameworks with written policies, operational controls, and governance oversight, including stress testing and contingency plans. The CSA also seeks feedback on additional liquidity tools, asset classification frameworks, and improved disclosure.