Background
On 15 April 2025, ESMA published its draft regulatory technical standards (RTS) and a final report on its guidelines on liquidity management tools (LMTs). For further details, please refer to the draft regulatory technical standards (RTS) and the final report.
Key changes proposed
Pursuant to the revised Alternative Investment Fund Managers Directive (AIFMD) and Undertakings for Collective Investment in Transferable Securities (UCITS) Directive ESMA was tasked to develop these draft RTS to determine the characteristics of LMTs available to AIFMs managing open-ended AIFs and UCITS and guidelines on the selection and calibration of LMTs by UCITS and AIFMs of open-ended AIFs.
This publication is a key step in the implementation of the revised AIFMD and UCITS Directive and will facilitate the harmonisation and full availability of the LMTs defined in the Directives in all Member States.
The final draft RTS and guidelines are intended to better equip EU fund managers to manage the liquidity of funds, particularly in the event of market stress. The draft RTS also aim to provide clarity on the functioning of LMTs, such as the use of side pockets for which rules currently vary significantly across the EU.
Next steps
The draft RTS have been submitted to the European Commission for adoption. The Commission must decide whether to adopt the RTS within 3 months. The guidelines will start to apply on the date the RTS enter into force. Funds established before the RTS enter into force will have 12 months to comply with the guidelines.
