ESMA final draft RTS on open-ended loan-originating alternative investment funds

The European Securities and Markets Authority (ESMA) has published its final report on the draft regulatory technical standards (RTS) for open-ended loan-originating alternative investment funds (OE LO AIFs), pursuant to the Alternative Investment Fund Managers Directive (AIFMD). Following consultation feedback, ESMA has made the following changes to the draft RTS: removed the requirement for Alternative Investment Fund Managers (AIFMs) to determine a target appropriate amount of liquid assets, instead AIFMs must ensure their OE LO AIFs have sufficient liquidity to honour redemption requests; revised the frequency of liquidity stress testing, requiring AIFMs managing OE LO AIFs to conduct such tests at least annually, rather than quarterly as previously proposed and; clarified certain provisions to improve interpretability. The final draft RTS have been submitted to the European Commission for adoption but, as the RTS are classified as non-essential Level 2 acts, they are not expected to be adopted before 1 October 2027 at the earliest.

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