IOSCO (International Organization of Securities Commissions) has launched two joint consultations on this topic, to coincide with the update of its recommendations on liquidity risk management. Recommendation 3 stresses the need to maintain consistency between the liquidity offered by an open-ended fund and the liquidity of its investment portfolio. To this end, it requires funds to be grouped into three categories according to the liquidity of the instruments in their assets (the so-called liquidity bucketing approach). The frequency of net asset values will depend on the category in which the fund is classified.

In its response, the AFG stresses several points:

• The liquidity of a security varies over time;
• The liquidity of a portfolio should not be assessed on a security-by-security basis, but on a fund-wide basis;
• Portfolio liquidity (which is variable) is not the only parameter to be taken into account when determining NAV frequency (which is fixed in the prospectus).
• In terms of liquidity risk management, European funds benefit from a comprehensive, robust and effective European regulatory framework. And this framework is currently complemented by the mandatory deployment of two liquidity management tools.

In conclusion, the AFG believes that, in Europe, this classification will bring no added value.