ALFI responds to the ESMA consultation on the Guidelines on liquidity management tools of UCITS and open-ended AIFs

On 8 July, the ESMA launched a consultation on the draft Guidelines on the selection and calibration of liquidity management tools (LMTs) by UCITS and AIFMs of open-ended AIFs for liquidity risk management and for mitigating financial stability risks. The draft Guidelines also provides indications as to the circumstances in which side pockets can be activated and allow adequate time for adaptation before they apply, in particular for existing UCITS and open-ended AIFs.

The response assesses the operational impact of the proposed principles for the selection and calibration of the LMTs:

• Suspension of subscriptions, repurchases and redemptions
• Redemption gates
• Extension of notice periods
• Redemption fees
• Swing pricing
• Dual pricing
• Anti-dilution levy
• Redemptions in kind
• Side pockets

and advocates for adjustments where appropriate to reflect industry models with the objective to ensuring the effective adoption of the tools in investors best interest.

View the ALFI response.