LIQUIDITY MANAGEMENT: The Experience of Investment Funds and DeFi Protocols

Liquidity management for investment funds is an essential topic for asset management that operates in the best interest of its clients. On the other hand, decentralized finance (DeFi) has introduced the use of disintermediated and automated blockchain infrastructure. What lessons can be learned from comparing traditional finance and DeFi protocols in terms of liquidity management? Link to register: https://evenium.events/4w6ycqgh 

Program:

5:00 PM: Introduction by Marie Brière, Amundi, Director of the FaIR program at the Louis Bachelier Institute
5:10 PM: Presentation by Fabrice Riva, Professor at the University of Paris Dauphine: “DeFi vs CeFi”
5:20 PM: Presentation by Serge Darolles, Professor at the University of Paris Dauphine: “Liquidity Management in Hedge Funds”
5:50 PM: Presentation by Louis Bertucci, Director of the C2DF (Center for Digital and Decentralized Finance): “Liquidity Provision in Decentralized Finance”
6:20 PM: Roundtable

• Luc Dumontier, OSSIAM
• Raul Leote de Carvalho, BNPPAM
• Clément Boidard, ESMA

6:50 PM: Conclusion by Adina Gurau Audibert, Director of Expertise at AFG

Regulators and supranational organizations have shown increasing interest in the topic of liquidity management for investment funds for over a decade. To better manage liquidity risk and ensure fair treatment among clients of the same fund, supervisors have proposed various measures or tools: liability monitoring, stress tests, and liquidity management tools. These approaches also help limit the risks of mass sales by avoiding any advantage to the first exit. The AFG has been a pioneer in this field by drafting guides reflecting the best practices of the Paris financial center.

On the other hand, decentralized finance has introduced the use of disintermediated and automated blockchain infrastructure. Liquidity provision functions traditionally provided by centralized entities are replaced by the use of automated programs, in the form of exchange protocols (DEX and AMM) that connect users and rely on liquidity pools. Managing liquidity in lending/borrowing pools is also a key issue for improving market efficiency while limiting risk.

How do DeFi protocols implement order flows, manage liquidity mismatches, and what lessons can be learned from comparing traditional finance and DeFi protocols in terms of liquidity management? These are the aspects that will be addressed during this event.