On 25 October, the Regulatory Technical Standards (RTS) for the European Long Term Investment Fund (ELTIF) Regulation were published in the Official Journal of the EU.  

The RTS have been published after some delay and they reinforce the Level 1 legislation introducing more flexibility to the ELTIF vehicles.

The Delegated Regulation includes provisions on:

• The use of derivatives for hedging purposes: is allowed if it is economically appropriate and aims at a verifiable reduction of risks, among other considerations.
• Minimum holding period: though not mandatory, ELTIF managers that choose to determine a MHP will have to follow a set of criteria including the liquidity profile of the underlying asset classes, the ELTIFs investment policy and its investor base.
• Information to be provided to NCAs:
  • Open-ended ELTIFs shall provide competent authorities with a variety of information, including the redemption policy, description of LMTs, anti-dilution procedures, and how assets and liabilities will be managed to meet redemption requests.
  • Throughout the life of the ELTIF, competent authorities can request information on the activation and use of LMTs and liquidity stress tests.
• Redemption policy: 
  • The percentage of redeemable assets will be calibrated on the basis of a number of criteria and one of the following           

1. the redemption frequency and the notice period of the ELTIF, as outlined in the three options of Annex I.
2. the redemption frequency and the minimum percentage of liquid assets (UCITS eligible assets), as outlined in Annex II.

• Liquidity management tools: the ELTIF manager will have the option to implement at least one anti-dilution LMT from anti-dilution levies, swing pricing or redemption fees.
• Matching mechanism: the Delegated Regulation follows principles-based approach and outlines the criteria that must be included in the policy for matching requests.
• Costs disclosure: includes common definitions, calculation methodologies and presentation formats of costs.

In March 2023, the ACC published a summary of the new rules that can be found here.

The RTS entered into force the day following its publication.  For more information, please contact Guillermo Pérez Molina, Private Credit Associate ([email protected]).