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Europe’s markets watchdog has delivered draft rules for open-ended loan-originating funds. On 21 October, ESMA published news and released report setting out Regulatory Technical Standards (RTS) that define when a loan-originating AIF may operate as open-ended. The package now goes to the European Commission for adoption, marking a key AIFMD II milestone for managers of private credit, including tokenized strategies.
The RTS focus on liquidity and redemptions. ESMA lists requirements such as a sound liquidity-management system, availability of liquid assets, stress testing, and an appropriate redemption policy aligned with loan portfolios. Following consultation feedback, the final text drops a fixed liquid-asset target and moves to annual (not quarterly) stress tests, while keeping the principle that funds must prove they can honor redemptions.
For tokenized private-credit funds, the changes may ease operations if on-chain subscriptions and redemptions are used. ESMA also notes the Commission may delay adoption of some non-essential Level-2 acts until at least 1 October 2027, so managers should plan for phased implementation. Legal commentators outline shift from a rigid checklist toward factor-based assessments by AIFMs and supervisors.
“The main benefit of the RTS is to establish a harmonised implementing framework… contributing to supervisory convergence and investor protection in the EU,” said ESMA in its Final Report (European Securities and Markets Authority, regulator). The authority submits standards to the Commission, after which Brussels has up to three months—extendable by one—to decide on adoption. The result could set common ground for both traditional and tokenized loan funds across Member States.
