ESMA seeks input on rules for long term investment funds

ESMA has launched a consultation on draft RTS under the revised ELTIF Regulation.
The aim of this consultation is to specify the way the new requirements of the revised ELTIF regulation will apply, particularly regarding redemption policies and matching mechanisms:
– ESMA is seeking input on the circumstances under which the life of an ELTIF is considered compatible with the life cycles of its individual assets. This ensures that the fund’s duration aligns with the underlying investments it holds.
– Additionally, ESMA is seeking feedback on the features of the redemption policy, including when and how investors can redeem their units or shares.
– Another aspect under consideration is the use of a matching mechanism of transfer requests from existing investors with requests from potential investors, either partially or in full, before the end of the fund’s life. ESMA is seeking input on the circumstances in which this matching mechanism should be employed.
– ESMA is also interested in stakeholders‘ views on costs disclosure, this pertains to the transparency and clarity of information regarding the costs associated with investing in ELTIFs.
The revised ELTIF Regulation, which prompted this consultation, introduced several reforms to enhance the flexibility and accessibility of ELTIFs. These reforms include the removal of certain barriers for retail investors, expanded eligibility criteria for assets, and more flexible fund rules. The regulation also distinguishes between ELTIFs that do not allow redemptions before the end of their life and those that do, provided certain conditions are met and liquidity management tools are employed.
ESMA will consider all comments received by 24 August 2023. All contributions should be submitted online at www.esma.europa.eu under the heading ‘Your
input – Consultations’. ESMA will consider the feedback received and aims to publish a final report and submit the draft technical standards to the European Commission for endorsement by 10 January 2024.