The European Securities and Markets Authority published draft Regulatory Technical Standards (RTS) for open-ended loan-originating alternative investment funds (OE LO AIFs), setting the conditions loan-originating AIFs (LO AIFs) must meet to retain an open-ended structure. The framework centres on liquidity risk controls and redemption arrangements aligned to the funds’ liquidity profiles. To remain open-ended, LO AIFs would need a sound liquidity management system, availability of liquid assets, and stress testing, alongside a redemption policy that takes account of the liquidity profile of OE LO AIFs. The draft RTS also specify factors alternative investment fund managers (AIFMs) should consider when setting the redemption policy and assessing OE LO AIF liquidity. Mandated under AIFMD, the draft RTS have been submitted to the European Commission for adoption. ESMA highlighted that the RTS are included in a list of non-essential Level 2 acts that the European Commission will not adopt before 1 October 2027 at the earliest.
European Securities and Markets Authority 2025-10-21
European Securities and Markets Authority publishes draft RTS setting liquidity and redemption requirements for open-ended loan-originating AIFs
The European Securities and Markets Authority (ESMA) released draft Regulatory Technical Standards (RTS) for open-ended loan-originating alternative investment funds (OE LO AIFs), focusing on liquidity risk controls and redemption arrangements. The RTS outline requirements for liquidity management, liquid assets availability, stress testing, and redemption policies aligned with the funds' liquidity profiles. Submitted under the Alternative Investment Fund Managers Directive (AIFMD), these standards are part of non-essential Level 2 acts not expected to be adopted by the European Commission before October 2027.