On 13 March 2024, the European Parliament and the Council adopted the directive (AIFMD II) amending the AIFMD and UCITS directives regarding delegation arrangements, liquidity risk management, supervisory reporting, the provision of depositary and custody services and loan origination by alternative investment funds. The Member States have until 16 April 2026 to transpose the new text into national law.
The final text remains broadly aligned with the version initially proposed by the European Commission and subsequently reviewed by the European Parliament over the past two years [COMMISSION STAFF WORKING DOCUMENT ]. The amendments introduce several important changes to the EU fund management framework.
AIFMD II
Loan Origination: AIFMD II creates a new regulatory framework for “loan-originating AIFs” (L-AIFs). L-AIFs may be open-ended or closed-ended structures and are subject to leverage caps of 175% and 300% respectively. AIFs must retain 5% of the notional value of the loans they originate and sell. A single borrower limit is introduced and capped at 20% of the AIF’s capital.
Liquidity Management Tools: Managers of open-ended AIFs are now required to select at least two liquidity management tools from a harmonised list. A new annex (Annex V) lists the available tools.
Prevention of Letter-Box Entities: AIFMD II strengthens substance requirements by clarifying that AIFMs must retain sufficient human and technical resources and ensure that at least two natural persons effectively conduct the business of the AIFM on a full-time basis.
Delegation: AIFMs must provide more detailed information regarding the scope and monitoring of the delegated activities.
Impact on UCITS (often referred to as ‘UCITS VI’)
Liquidity Management Tools: Like AIFMs, UCITS management companies must implement at least two LMTs from the harmonised list. They must develop detailed policies for activating and deactivating these tools.
Delegation Alignment: UCITS delegation rules are aligned with AIFMD, requiring more granular reporting on the amount of assets delegated to third parties and the resources used to monitor those delegates.
New Reporting Obligations: UCITS management companies will face new reporting requirements regarding trades and instruments, aimed at reducing inconsistencies in data collection.
An interesting development is that, by 16 April 2026, ESMA must submit to the Commission a report on the development of an “integrated collection of supervisory data”, focusing on reducing duplication and inconsistencies across reporting frameworks and improving data standardisation and the efficient sharing of supervisory data.
In addition to defining the ‘integrated collection of supervisory data’, ESMA is tasked with developing the Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) to prescribe the exact content, formats, and data standards for these reports. These developments may ultimately accelerate the industry’s transition towards more harmonised supervisory reporting templates, potentially replacing the current Annex IV framework and various national UCITS reporting formats.
SolvencyAnalytics will continue to monitor the implementation of AIFMD II and related ESMA reporting initiatives, particularly regarding data harmonisation and integrated supervisory reporting frameworks. For further information on the operational implications of these developments, please contact our team.