Sebi asks MFs to conduct stress tests

New Delhi: Markets regulator Sebi has asked the mutual fund (MF) industry to proactively conduct stress tests, a key component of risk management for the financial sector, which will help strengthen the ecosystem, its whole-time member Ananth Narayan Gopalakrishnan said on Friday. The regulator’s stress testing emphasizes the need to assess and manage liquidity risks, especially in small-cap and mid-cap equity schemes.

Speaking at a mutual fund event, Gopalakrishnan highlighted the importance of modelling stress scenarios not just for individual schemes or fund houses, but for the entire mutual fund ecosystem.

“It is also important to model stress scenarios for the entire composite mutual fund ecosystem. I would strongly encourage the industry and AMFI to take the lead and proactively conduct objective and credible industry wide stress tests. themselves,” Gopalakrishnan said.