Chris Iggo: Bond liquidity in a post-crisis world

Chasing yield

clock • 4 min read

There has been no shortage of press coverage on financial market liquidity in recent months, writes Chris Iggo, with several examples of asset managers experiencing difficulties with the management of mutual funds that have had exposure to illiquid assets.

Since the financial crisis, of course, the market backdrop - and how liquidity is viewed - has altered significantly. Regulatory changes, such as increased capital requirements as well as macroeconomic factors, among others, have all impacted secondary bond market liquidity. As a result, over the past decade, banks and asset managers, as well as other players, have had to adapt their business models and risk management frameworks. The challenge in today's world is to maintain a sufficient level of liquidity in portfolios to meet potential client redemptions in all market conditions. This...

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