The fund suffered from a combination of funding and asset liquidity.

The bid-offer spread is used by market participants as an asset liquidity measure.

Asset liquidity - An asset cannot be sold due to lack of liquidity in the market - essentially a sub-set of market risk.

Asset liquidity arose from LTCM failure to account for liquidity becoming more valuable (as it did following the crisis) .

It so helps users to monitor capital, to set and manage limits policy and ensure regulatory compliance - such as the 7.6% asset liquidity to be demanded of banks as from April 1.