The European Commission on 19 July 2024 the regulatory technical standards (RTS) for the regulation on European long-term investment funds (Eltifs), to which the Luxembourg market . Three months later, the European Commission Delegated Regulation has been and will enter into force on 26 October. Here’s how the market reacted.
“This is excellent news for an Eltif market that is clearly taking off and expanding rapidly
“The Delegated Act on Eltif technical standards have now finally been published after a long period of uncertainty,” , partner at Linklaters and global head of investment funds, told Paperjam. “This is excellent news for an Eltif market that is clearly taking off and expanding rapidly. Managers have been waiting for getting absolute certainty around the applicable legal framework and today’s publication will allow many sponsors to now proceed with their evergreen Eltif projects. I am delighted to see the Eltif framework settling in a positive way and am expecting to see the number and volume of Eltifs increase even further in the months to come.”
The long awaited RTS are a good compromise with less standardised requirements and taking into account certain existing market practices
“The long awaited RTS are a good compromise with less standardised requirements and taking into account certain existing market practices,” said , a partner at Elvinger Hoss Prussen who advises clients in regulatory matters and structuring Luxembourg investment fund operations. “It also allows to take into consideration the specific features of an Eltif depending of its investment strategy and liquidity profile.”
The Eltif 2.0 RTS address most pain points raised by the industry, in particular, with respect to liquidity management tools and redemption mechanisms for open-ended Eltifs
“In our view, the Eltif 2.0 RTS address most pain points raised by the industry, in particular, with respect to liquidity management tools (LMTs) and redemption mechanisms for open-ended Eltifs,” said Sebastiaan Hooghiemstra, senior associate in Loyens & Loeff’s investment management practice, and , partner and head of the firm’s investment management practice. “Unlike earlier iterations published, the final RTS do not contain any strict requirements with respect to the duration of the minimum holding period of an Eltif.” In addition, “the final RTS allow for a proportional approach with discretion for Eltif managers in terms of (a combination of) (i) minimum notice periods, (ii) redemption frequencies/gates and (iii) liquidity pockets. Lastly, “the final RTS, contrary to earlier iterations, do not require anti-dilution LMTs to be adopted by ‘default’ for which a derogation request for the use of any other LMT would need to be made to a competent authority.”
As of 25 October, 90 of the 139 European long-term investment funds on the European Securities and Market Authority’s register of authorised Eltifs are domiciled in Luxembourg. That gives the grand duchy roughly two-thirds of the market share.