ESMA report on amended guidelines on LMTs of UCITS and open-ended AIFs

The European Securities Markets Authority (ESMA) has published a report with amended guidelines on liquidity management tools (LMTs) of Undertakings for Collective Investment in Transferable Securities (UCITS) and open-ended Alternative Investment Funds (AIFs). The amendments aim to align with the regulatory technical standards (RTS) adopted by the European Commission on 17 November. To ensure consistency between the guidelines and the RTS, ESMA has made some targeted amendments to the guidelines in two areas: (i) the inclusion of investor-level redemption gates to mitigate first-mover advantage, and (ii) the calculation of implicit transaction costs for anti-dilution LMTs, which should only be considered where appropriate to the fund's investment strategy and estimated on a best-effort basis. The guidelines will be translated into all official EU languages and published on ESMA's website. National competent authorities will have two months to notify ESMA on whether they comply or intend to comply with the guidelines. The updated guidelines will apply from the RTS application date (which is specified as 16 April 2026), with a 12-month transitional period for existing funds.

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