C793 – Liquidity Risk Management- The revised framework introduced by the amending Directive (EU) 2024/927

TO : Cyprus Investment Fund Managers (‘CyIFMs’): i. Cyprus UCITS Management Companies and Self-Managed Cyprus UCITS (‘CUCITS MCs’) ii. Cyprus Alternative Investment Fund Managers and Self￾Managed Cyprus AIFs (‘CAIFMs’) FROM : Cyprus Securities and Exchange Commission DATE : 06 August 2026 CIRCULAR No. : C793 SUBJECT : Liquidity Risk Management- The revised framework introduced by the amending Directive (EU) 2024/927

1. The Cyprus Securities and Exchange Commission (‘CySEC’) wishes to draw the attention of Cyprus Investment Fund Managers (‘CyIFMs’), to the significant amendments introduced to the European regulatory framework in relation to liquidity risk management and liquidity management tools.

2. In particular, CySEC draws attention to the amendments introduced by Directive (EU) 2024/927, which amended Directive 2011/61/EU on Alternative Investment Fund Managers and Directive 2009/65/EC on UCITS, in relation to liquidity risk management (among others). These amendments strengthen the existing framework and introduce harmonised requirements regarding the availability, selection, calibration, activation and use of liquidity management tools by UCITS and open-ended AIFs.

3. CySEC also draws the attention of CyIFMs to the ESMA Guidelines on liquidity management tools of UCITS and open-ended AIFs, as well as to the relevant Regulatory Technical Standards (‘RTSs’), which further specify the characteristics of liquidity management tools.

4. In May 2026, CySEC issued Circular 776 to inform the Cyprus Investment Fund Managers (‘CyIFMs’) of the ESMA Guidelines on Liquidity Management Tools (LMTs) for UCITS and open-ended AIFs and their adoption by CySEC through their incorporation into its supervisory practices and regulatory approach.

5. As regards the RTSs specifying the characteristics of LMTs, supplementing the AIFMD and UCITS Directives (i.e Delegated Regulations (EU) 2026/465 and (EU) 2026/466, respectively), these are binding in their entirety and directly applicable in all Member States and their relevant markets (i.e. do not need to be explicitly adopted).

6. The RTS aim to promote a consistent application of LMTs across the Union and strengthen the resilience of UCITS and AIFs under normal and stressed market conditions. To this end, they specify the characteristics of LMTs available to UCITS management companies and AIFMs, including the operational mechanisms, activation criteria and calibration methodologies applicable to such tools in the context of liquidity risk management and investor protection.

7. The European Commission broadly adopted ESMA's proposed RTS on LMTs, however certain targeted amendments were introduced in the final Delegated Regulations. In particular: o greater flexibility was introduced regarding the calibration and activation of redemption gates o investor-level redemption gates were expressly incorporated within the AIFMD framework o the possibility of combining investor-level and fund-level redemption gates was clarified o activation thresholds may be calculated on the basis of cumulative redemption requests over a defined period and not solely by reference to a single dealing day o the requirements relating to implicit transaction costs and market impact for anti-dilution tools were refined and limited to situations where such calculations are appropriate to the investment strategy of the relevant fund and can be performed on a best - effort basis.

8. The RTS apply as of 16 April 2026. In line also with the ESMA Guidelines, UCITS and AIFs established on or after that date are expected to comply immediately, while UCITS and AIFs established before that date, benefit from the applicable transitional arrangements until 16 April 2027.

9. CySEC takes this opportunity to remind CyIFMs of its previous guidance relevant to Liquidity Risk Management i.e. Circulars, C403 regarding the ESMA Guidelines on Liquidity Stress Testing in UCITS and AIFs and C548 regarding Guidance on Liquidity Risk Management (‘LRM’). CySEC expectations CySEC expects CyIFMs and their Boards of Directors to take an active and timely role in assessing and implementing the Liquidity Risk Management requirements as amended.

In particular, CyIFMs should perform a documented gap analysis of their existing liquidity risk management frameworks, policies, procedures, fund documentation, systems and operational arrangements against the requirements of the RTS, the ESMA Guidelines and CySEC’s relevant guidance. To this end, CyIFMs should ensure that the relevant personnel and any delegated service providers, have the necessary expertise, systems and operational capacity to support the effective implementation of the applicable liquidity management arrangements. The Boards of Directors are expected, to exercise effective oversight over this process, ensure that appropriate actions are taken within the applicable timelines and satisfy themselves that the selection, calibration, activation and use of LMTs are suitable for the nature, scale, complexity, investment strategy, liquidity profile and redemption arrangements of each UCITS or open-ended AIF under management. CySEC expects CyIFMs to maintain adequate records evidencing the assessments performed, decisions taken and measures implemented, and may request such evidence in the context of its supervisory activities. Sincerely, Panikkos Vakkou Vice Chairman Cyprus Securities and Exchange Commission