Liquidity Risk: Market liquidity risk is the risk that the market liquidity worsens

when you need to trade. Funding liquidity risk is the risk that a trader cannot
fund his position and is forced to unwind. The most extreme form of market
liquidity risk was that dealers were shutting down (no bids!), which was
happening in a number of markets such as those for certain asset-backed
securities and convertible bonds. We are also experiencing extreme funding
liquidity risk since banks are short on capital,