Liquidity Management Tools: the AMF intends to comply with ESMA’s Guidelines
The Autorité des Marchés Financiers (AMF) intends to apply the European Securities and Markets Authority’s (ESMA) guidelines on liquidity management tools for UCITS (undertakings for collective investment in transferable securities) and open-ended AIFs (alternative investment funds) as soon as the work to transpose the AIFM 2 Directive has been completed.
Context
The AIFM 2 Directive stipulates that management companies of UCITS and open-ended AIFs must select at least two liquidity management tools (or at least one for money market funds) from among:
- Gates
- Extension of notice periods
- Redemption fees
- Swing pricing
- Dual pricing
- Anti-dilution levies
- Redemptions in kind (only for professional investors)
The Directive also provides for two further tools that may be activated, on an exceptional basis, without the need for them to be specified in the fund’s documentation, where circumstances so require and where this is justified by the need to protect the interests of investors in the AIF or UCITS: the suspension of subscriptions, redemptions and repayments, and the asset ring-fencing mechanism.
Published by ESMA on 12 March 2026, the guidelines on liquidity management tools apply from 16 April 2026, the date of entry into force of Commission Delegated Regulations (EU) 2026/465 and 2026/466 of 17 November 2025. For existing funds, these guidelines will apply following a twelve-month transitional period, i.e. from 16 April 2027.
These guidelines set out the procedures for the selection and calibration of liquidity management tools by UCITS and open-ended AIFs, for the management of liquidity risk and to mitigate risks to financial stability.
The national regulatory framework will be updated to take account of these guidelines once the transposition of Directive (EU) 2024/927 has been completed.
Further details regarding ESMA’s guidelines
The ESMA guidelines reiterate that responsibility for managing liquidity risk lies primarily with UCITS and managers of open-ended AIFs.
They are structured around four main sections covering (1) general principles, (2) liquidity management tools based on quantitative data, such as the suspension of subscriptions, redemptions and repayments, the capping of repayments, the extension of notice periods and repayment in kind, (3) anti-dilution tools, including redemption fees, net asset value adjustment (‘swing pricing’), the dual valuation system, and adjustable entry and exit fees in favor of the fund, and (4) the asset ring-fencing mechanism (‘side pocket’).
