On 21 October 2025, the European Securities and Markets Authority (ESMA) published its final report and final draft regulatory technical standards (RTS) on open-ended loan-originating alternative investment funds (LO AIFs) as mandated under the revised Alternative Investment Fund Managers Directive (AIFMD).

Background

Directive (EU) 2024/927 amending the AIFMD and the UCITS IV Directive (AIFMD II) amended the AIFMD in relation to LO AIFs. With respect to LO AIFs, Article 16(2)(a) of the revised AIFMD provides that an alternative investment fund manager (AIFM) shall ensure that the LO AIF it manages is closed-ended. However, by way of derogation to this requirement, a LO AIF may be open-ended provided that the AIFM that manages it is able to demonstrate to the competent authorities of the AIFM’s home Member State that the alternative investment fund’s (AIF’s) liquidity risk management system is compatible with its investment strategy and redemption policy.

On 12 December 2024, ESMA issued a consultation paper on draft RTS on LO AIFs per its mandate under Article 16(2)(f) of the revised AIFMD. The draft RTS determine the requirements which LO AIFs are to comply with to maintain an open-ended structure. The consultation closed on 12 March 2025.

Feedback

Following feedback on the consultation, ESMA has made certain changes to the final draft RTS which include:

  • Removing the fixed asset requirement and instead stipulate that AIFMs must ensure their open-ended LO AIFs have sufficient liquidity to honour redemption requests.
  • Updating the frequency of stress testing so that AIFMs managing open-ended LO AIFs must carry out liquidity stress tests at least once a year, rather than every quarter as previously proposed.
  • Changing the wording setting requirements for AIFMs that ‘intend to manage’ open-ended LO AIFs in the final draft RTS so as to avoid any misinterpretation as requiring AIFMs to seek pre-authorisation from their competent authorities before managing an open-ended LO AIF.

The final draft RTS is set out in Annex IV of the final report which includes the requirements that LO AIFs must comply with and also sets out a list of factors that AIFMs must consider when determining the redemption policy and assessing the liquidity of LO AIFs.

Next steps

The draft RTS has been submitted to the European Commission which will make a decision on whether to adopt the RTS within three months or extend that period by one month.