March 9, 2020 - updated on March 18, 2020. Members of the LSTA have taken multiple steps over the preceding days to ensure business continuity and a well-functioning loan market during the coronavirus (COVID-19) outbreak. Members are following Center for Disease Control and state and local health authority guidance to assure the health and safety of the more than 20,000 loan market employees.
A survey of LSTA’s board of directors, as well as calls with non-board members, found that they have activated pre-existing business continuity plans and have responded to the unique challenges posed by COVID-19. Members noted that adjustments in staffing and locations are being made and will continue to be made on a situational basis.
Specific actions taken by Board members’ firms to facilitate the continued proper functioning of the loan market include:
- Proactively dispersing both customer-facing and middle/back office employees to electronically secure alternative locations as a preventative measure to protect employees and avoid exposing them to potential outbreak, as well as for preparing redundancy systems for key market functions
- Maintaining adequate staffing levels in the event of the continued spread of the virus
- Implementing procedures to continue to settle and close trades in accordance with LSTA guidance
Actions taken by the LSTA:
- Regular teleconference calls with our Board of Directors and Executive Committee on business continuity planning and resolution of market issues
- Regular member outreach and troubleshooting
- Conference Calls with regulators and lawmakers on market conditions on an as-needed basis
Since the beginning of last week, members of the LSTA have noted that the loan market has been orderly and trading liquidity has been sufficient. Dealer desks have already split teams by location with strict orders for social separation until authorities and management teams are confident that risks of spread are no longer present. Many investment management teams were also executing on Business Continuity Plans that separated portfolio, trading and research personnel to multiple locations. Please find the LSTA’s statement on CLO liquidity here.