AIFMD 2.0 – ESMA consults on loan-origination RTS

AIFMD 2.0 – loan-origination

The amendments made to the Level 1 text of AIFMD earlier this year included the introduction of a loan-originating regime for AIFs. (For a summary of the changes made, see our AIFMD 2.0 Overview notes here.)

Under the revisions, a loan-originating AIF must be closed-ended except where the AIFM can demonstrate to its home NCA that the AIF's liquidity risk management system “is compatible with its investment strategy and redemption policy”.

ESMA publishes a consultation paper

On 12 December 2024, ESMA published a consultation paper setting out draft regulatory technical standards (RTS) with which loan-originating AIFs must comply in order to maintain an open-ended structure.

The aim of the draft RTS is to establish what elements and factors an AIFM must consider when seeking to demonstrate to its NCAs that a loan-originated AIF can be open-ended.

ESMA’s mandate

According to ESMA’s mandate, these requirements must include

• a sound liquidity management system
• the availability of liquid assets and stress testing and
• an appropriate redemption policy having regard to the liquidity profile of loan-originating AIFs.

At the same time, the requirements must also take due account of

• a loan-originating AIF’s underlying loan exposures
• the average repayment time of the loans and
• the overall granularity and composition of the AIF’s portfolio.

Timing - and what happens next?

This consultation had been expected to be published in July, alongside that on liquidity management tools (LMT) – see our summary here. However, there has been a delay, believed to be the result of a difference of views between the Commission and ESMA on how strict an approach to take.

This is important in terms of timing – under the revisions to AIFMD, ESMA was mandated to submit draft RTS on both LMTs and loan-origination by 16 April 2025.

While the LMT advice may be ready in time, the draft RTS on loan origination clearly won’t – the consultation closes on 12 March 2025 and ESMA now intends to finalise the draft RTS by Q3/Q4 2025.

This does give a little leeway - the changes which make up AIFMD 2.0 will come into effect on 16 April 2026.