Legal Updates

 Asset Management and Investment FundsDecember 21, 2023

ESMA publishes finalised draft implementing measures under the ELTIF Regulation

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For further information on any of the issues discussed in this publication please contact the related contact(s) on this page.


The revised ELTIF Regulation[1], commonly referred to as ELTIF 2.0, enters into force on 10 January 2024.

Under the regulation, ESMA is mandated to prepare draft implementing measures on various aspects of the ELTIF framework. As part of its preparatory work, it published a consultation paper earlier this year in which it sought feedback from interested stakeholders on its proposed implementing measures.

ESMA has now published a report containing its finalised proposals (Draft Implementing Measures) which have been submitted to the European Commission for its consideration.

We have set out below some of the key provisions of the Draft Implementing Measures likely to be of interest to asset managers who may be considering the ELTIF product to house investments in private assets, property, infrastructure and other real assets.

Maximum Redemption Frequency of an ELTIF

ESMA has proposed that in the case of any ELTIF which offers redemptions, such ELTIF must generally not permit redemptions more frequently than quarterly.

Importantly however, ESMA has also proposed that it should be possible for ELTIFs to provide more frequent redemptions where the AIFM is able to justify to the ELTIF’s competent authority why a higher redemption frequency would be more appropriate. Such justification should be made on the basis of the individual features of the ELTIF and the actual possibility to have a reliable, sound and updated valuation of the assets of the ELTIF.

This approach, which provides some flexibility around the frequency of redemptions within an ELTIF, will be welcomed by industry.

Minimum Holding Periods

In another positive development, ESMA has decided against imposing a specific or “fixed” minimum holding period in any ELTIF which offer redemptions and instead has opted for a more “principles-based” approach to the determination of the minimum holding period.

While it has proposed that ELTIFs offering redemptions must set a minimum holding period for investors, such holding period can be determined by the AIFM taking into account the specific criteria set down in the Draft Implementing Measures. These criteria include the specific liquidity profile, investor base, investment strategy and portfolio composition of the relevant ELTIF.

Mandatory Notice Periods

Under its original proposals, ESMA had suggested that the redemption notice period be set down in the finalised legislation, thus allowing managers of in-scope ELTIFs no flexibility around the duration of such notice period.

ESMA has now revised its position and has proposed that it should be up to each AIFM to determine the appropriate redemption notice period based on the liquidity profile of the underlying assets of the ELTIF.

However, ESMA has also proposed that where the redemption notice period is less than 12 months, the length of that notice period should be determined by (i) the minimum amount of liquid assets held by the ELTIF and (ii) a percentage of the maximum amount of such liquid assets in accordance with the parameters set down in the Regulation.

Redemption Policy and Mandatory Use of Liquidity Management Tools

ESMA had originally proposed that all ELTIFs offering redemptions would be required to implement at least one anti-dilution tool from (i) anti-dilution levy, (ii) swing pricing and (iii) redemption fee in addition to redemption gates in exceptional circumstances only.

ESMA has now proposed that it should be possible for an ELTIF to select a different liquidity management tool other than those listed above provided that adequate justifications for selecting such tool is provided to the competent authority of the ELTIF.

ESMA has also clarified that redemption gates may be used by AIFMs to limit redemptions in order to comply with the quantitative requirements applicable to notice periods of less than 12 months and may also be used in stressed market conditions and in other specific circumstances where necessary to mitigate any potential financial stability risk.

Liquidity Matching Mechanism

The matching mechanism is a unique feature in pan-EU investment funds legislation which allows for the full or partial matching of transfer requests of existing investors with transfer requests received from potential investors.

ESMA has now proposed a principles-based approach to the matching mechanism which, if accepted by the European Commission, should allow sufficient flexibility to adapt the mechanism to the specific characteristics of the relevant ELTIF (e.g. investment strategy, investor base or liquidity profile).


The publication of the Draft Implementing Regulations is an important milestone in the creation of a functioning and flexible ELTIF regime which allows both EU retail and professional investors to gain exposure to long-term investments. We now await the views of the European Commission on these measures as we move towards the implementation of the ELTIF 2.0 framework in 2024.

For a detailed analysis of the key features of the Irish ELTIF, please refer to our recent guide on the topic.


[1] Regulation (EU) 2015/760 as amended by Regulation (EU) 2023/606

DISCLAIMER: This document is for information purposes only and does not purport to represent legal advice. If you have any queries or would like further information relating to any of the above matters, please refer to the contacts above or your usual contact in Dillon Eustace.

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