ESMA Publishes Final Report On The Draft Regulatory Technical Standards For Open-Ended Loan-Originating AIFs

QuickTake

On 21st October 2025, the European Securities and Markets Authority (ESMA) published its Final Report¹ on the Draft Regulatory Technical Standards (RTS) for open-ended loan-originating alternative investment funds (AIFs) and their managers (AIFMs) regulated under the Alternative Investment Fund Managers Directive (AIFMD), as revised and supplemented (AIFMD II).

ESMA's final RTS establish a principles based but prescriptive framework enabling loan originating AIFs to operate as open ended, anchored on four pillars: an appropriate redemption policy, the maintenance of sufficient liquidity to meet redemptions, robust liquidity stress testing and ongoing monitoring. Several consultation stage proposals have been softened, notably the removal of any fixed liquid asset "target bucket" and a reduction in the minimum frequency of liquidity stress testing to at least annually. Crucially, the RTS confirm that expected cash flows generated by loans qualify