European Commission Proposes ELTIF RTS Amendments

Updates to the European Long-Term Investment Fund Regulation, known as ELTIF 2.0¹, entered into force on 10 January 2024. These long awaited amendments to the ELTIF Regulation² were expected to combine the best of both worlds - professional and retail, open and closed-ended - into one 'fit for all purpose' vehicle.

ELTIF 2.0 aimed at striking a fine liquidity balance, in order to reconcile the presence of retail investors with a wider array of eligible illiquid assets. However, ever since the adoption of the final text, market players have expressed particular concerns in relation to its impact on open-ended ELTIFs.

Liquidity requirements, liquidity management tools (LMTs), notice periods and cost disclosures have been in the spotlight since the European Securities and Markets Authority (ESMA) submitted the first draft Regulatory Technical Standards (RTS)³ to the ELTIF Regulation in December 2023.