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22 April 2024

The AMF completes its policy on gates in master-feeder structures

Following approval of the amendments to its General Regulation, the Autorité des marchés financiers (AMF) has updated its policy on the capping of redemptions (gates) in master-feeder structures.

Following the amendments to the articles governing gates in the AMF General Regulation (notably articles 411-20-1 and 422-21-1), the AMF is updating its Instruction DOC-2017-05 on the procedures for introducing liquidity management mechanisms to introduce a mechanism whereby, when a master collective investment undertaking (CIU) triggers its gates, its feeder can also trigger its gates at its own level. Where appropriate, this option thus enables the feeder CIU to avoid having to suspend redemptions altogether. 

Application of this mechanism is subject to the following conditions:

  • the feeder CIU executes at least the proportion of redemptions executed by the master CIU;
  • the prospectus and the fund rules or articles of incorporation of the feeder CIU specify the procedures for capping redemptions of units or shares when the management company of the master CIU decides to cap redemptions of the latter’s units or shares, as well as the procedures for capping redemptions of units or shares by the master CIU;
  • the information exchange agreement between the feeder CIU and the master CIU (or, where applicable, the internal rules of conduct when both CIUs are managed by the same investment management company), sets out the arrangements for the master CIU to provide information to the feeder CIU if the redemption cap is triggered.

The AMF is also updating the relevant policy documents to extend the transitional period applicable to gates incentives. This means that existing feeder funds can introduce such gates without prior approval from the AMF, and can inform unitholders by any means until 31 December 2024. If they fail to do so before that date, they must inform the AMF and state the reasons, and also include a warning in the fund documentation.

Moreover, a clarification has been added to the standard rules for employee savings plan investment funds: if the gates are triggered, the maximum period of one month following the establishment of the net asset value for executing a redemption request may be exceeded.