Publication of ELTIF 2.0 RTS

Level 2 measures under ELTIF 2.0 have been published by the European Commission and are now being scrutinised by the European Parliament and the Council of the European Union.

After prior consultations on and subsequent amendments to the draft regulatory technical standards (“RTS”) proposed by the European Securities and Markets Authority under the ELTIF 2.0 Regulation¹, the final version of the RTS was published by the European Commission on 19 July 2024.

Following the amendment of the ELTIF Regulation² by the ELTIF 2.0 Regulation, the adoption of the RTS by the European Commission is a significant step for the further finalisation of the regulatory framework applicable to ELTIFs and in particular to open-ended ELTIFs.

The RTS consist of a Delegated Regulation and two Annexes which can be accessed here:

https://ec.europa.eu/transparency/documents-register/detail?ref=C(2024)4991&lang=en

Purpose

The RTS fill a gap existing since the adoption of the ELTIF 2.0 Regulation as they provide for specific rules with respect to the following topics:

(i) the conditions to be fulfilled for the use of derivates to be considered for hedging purposes only,

(ii) the circumstances in which the life of an ELTIF and the life-cycles of each of its assets are to be considered compatible,

(iii) the criteria for the determination of the minimum holding period,

(iv) the minimum information to be provided to the competent authority with respect to and the requirements applicable to the redemption policy and liquidity management tools of the ELTIF,

(v) the criteria for the determination of the percentage of liquid assets available to meet redemption requests,

(vi) the minimum criteria to be met by the matching policy, and related provisions regarding determination of the execution price, the level of fees, costs and charges and the information to be disclosed to investors, in case the ELTIF provides for the possibility of full or partial matching of transfer requests of its units or shares by existing and new investors,

(vii) the criteria for the assessment of the market for potential buyers and for the valuation of each of the ELTIF's assets to be divested, and

(viii) the common definitions, and calculation methodologies and presentation formats of the costs of the ELTIF.

Next steps

After the adoption of the RTS the European Commission submitted them to the European Parliament and to the Council of the European Union for review and consultation. These two institutions have now three months to scrutinise them. The deadline can however be expanded by further three months by either institution.

Consequently, one can expect the RTS to be published in the Official Journal of the European Union sometime in the fourth quarter of 2024.

Should you have any questions on the new RTS or generally on ELTIFs, please feel free to contact our Ashurst investment funds team.

Footnotes

_{1. Regulation (EU) 2023/606 of the European Parliament and of the Council of 15 March 2023 amending Regulation (EU) 2015/760 as regards the requirements pertaining to the investment policies and operating conditions of European long-term investment funds and the scope of eligible investment assets, the portfolio composition and diversification requirements and the borrowing of cash and other fund rules}

_{2. Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds}