On 18 December 2025, the European Securities and Markets Authority (“ESMA”) published its Report on amended guidelines on liquidity management tools of UCITS and open-ended AIFs (the “Guidelines”). The purpose behind the amendments to the Guidelines, originally published in April 2025, is to align the Guidelines with two specific areas of the regulatory technical standards (the “RTS”) on liquidity management tools (“LMTs“) under the revised AIFMD and UCITS Directive, as adopted by the European Commission in November 2025.

The amendments relate to the following:

1. Investor-level redemption gates

In the RTS under AIFMD, Recital 3 and Article 2 each envisage the imposition of “investor-level” redemption gates. The Guidelines have now been amended by inserting a new paragraph 27a which provides that fund managers of open-ended AIFs with no retail investors and with a limited number of professional investors should consider investor-level redemption gates, alone or in combination with fund-level gates, to mitigate first mover advantage.

2. Implicit transaction costs for Anti-Dilution Tools

For Anti-Dilution Tools (“ADTs“) for UCITS and open-ended AIFs, the Guidelines previously provided that both explicit and implicit transaction costs of subscriptions, repurchases and redemptions should be included in the estimated cost of liquidity. However, the equivalent provision in the RTS refers only to explicit transaction costs in this context, and provides that implicit transaction costs should be included only where appropriate to the investment strategy of the fund and estimated on a best efforts basis.

The Guidelines have now been amended to be consistent with this, whereby paragraph 37 of the Guidelines provides that the estimated cost of liquidity should consider implicit transaction costs, including any significant market impact of asset purchases or sales, only where appropriate to the investment strategy and estimated on a best effort basis. These amendments apply to both swing pricing and anti-dilution levies.

Next Steps

The Guidelines will apply from the application date of the RTS on 16 April 2026, and funds created after that date will need to comply. Funds already in existence prior to that date will have until 16 April 2027 to comply.

For more information and advice on the Guidelines or RTS or other changes to AIFMD or the UCITS Directive, please contact any member of our Asset Management and Investment Funds Group