ESMA finalises technical standards under the revised ELTIF regulation
ESMA has finalized the draft RTS for the ELTIF regulation. The draft covers various aspects, including the compatibility of ELTIF life cycles with individual asset life cycles, features of the redemption policy, use of matching mechanisms, and costs disclosure. ESMA considered feedback from 23 stakeholders in its consultation (eventid=21373), leading to proposed amendments.
In terms of minimum holding period, ESMA suggests allowing ELTIF managers to choose based on specified criteria and justifications to the competent authority. For maximum redemption frequency, a common standard of quarterly redemption is proposed, with flexibility for managers to deviate, subject to justifications. The choice of liquidity management tools includes mandatory implementation of anti-dilution mechanisms and redemption gates, with conditional flexibility for ELTIF managers.
The notice period and maximum percentage of liquid assets are addressed, applying minimum percentages based on the notice period and specifying maximum redemption percentages. The final RTS aims for a balance, proposing prescriptive rules while allowing deviations under specific circumstances.
The costs disclosure framework includes fixed costs, ongoing costs, and acquisition costs. ESMA aligns ELTIF cost disclosure with existing frameworks, considering stakeholder feedback. The report emphasizes consistency, transparency, and flexibility, acknowledging the diverse nature of ELTIFs and their underlying assets.
