AIFMD II Update 3: Liquidity Management Tools

SUPERVISORY GUIDELINE
| March 2026 1
AIFMD II update 3
Third edition: liquidity management tools (LMTs) In short From 16 April 2026, compliance with the new legal requirements of Directive 2024/927 (AIFMD II) is mandatory. AIFMD II introduces, among other things, new requirements regarding liquidity risk management and liquidity management tools (LMTs). LMTs are instruments used to control the liquidity risk of funds, particularly during times of market stress. Managers of open-end funds must possess at least two relevant LMTs and associated 'LMT policy'. The selected LMTs, the policy, and the activation or deactivation must be reported. A modified reporting procedure has been established for this purpose. This update supports managers in preparing timely for the new obligations. Managers of open-end funds must select at least two relevant LMTs AIFMD II requires that managers of open-end AIFs and UCITS, for each fund they manage, select at least two relevant LMTs. The two minimum LMTs to be selected must be chosen from the list in Annex V, points (2) to (8) of Directive 2011/61/EU. For undertakings for collective investment in transferable securities (UCITS), the list in Annex II of Directive 2009/65/EC applies. It is not permitted to choose exclusively for swing pricing or dual pricing. In their selection, managers must take into account the characteristics of the fund, such as the investment strategy, the underlying assets, and the redemption policy. For a money market fund (MMF) for which a license has been granted under the Money Market Funds Regulation, managers may choose to select only one LMT. The LMTs available to managers of open-end funds are as follows:

1. Simultaneous suspension of subscriptions, redemptions, and repayments
2. Temporary and partial restriction on redemption requests
3. Extension of a notice period
4. Redemption fee
5. Swing pricing (full and/or partial under AIFMD II)
6. Dual pricing
7. Anti-dilution levy
8. In-kind redemption
9. Creation of side pockets
   Important: Under AIFMD II, the LMTs from point 1 (suspension of subscriptions, redemptions, and repayments) and point 9 (creation of side pockets) are selected by operation of law and can be used by any fund. These LMTs do not count towards the required selection of at least two LMTs per fund. Managers may only use a suspension of subscriptions, purchases, or repayments, or side pockets in exceptional cases, when circumstances require it and when this is justified in light of the interests of the investors in the investment undertaking.

AIFMD 2 update 3 - Liquidity management tools (LMTs) 2 Additional LMTs possible, but do not count towards the minimum requirement In addition to the LMTs included in Annex V of the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) and, for undertakings for collective investment in transferable securities, in Annex II of Directive 2009/65/EC, managers may also select other instruments. These so-called 'other' instruments can supplement the existing package of measures. However, these additional LMTs do not count towards the legal requirement that at least two relevant LMTs must be selected for each open-end fund. The minimum requirement can therefore only be fulfilled with instruments included in the directives themselves. These other LMTs do not count towards the requirement that at least two relevant LMTs must be selected. Both the LMTs from the annexes and the other, additionally selected instruments must be included in the offering documentation and in the fund regulations, terms, or articles of association. Appropriate LMT policy is a mandatory part of liquidity management In addition to the obligation to select at least two LMTs per fund, managers must have developed policies and procedures for the chosen instruments. These detailed policies and procedures ('LMT policy') must relate to the selection, activation, deactivation, and calibration of the selected LMTs. The LMT policy must also provide for the operational and administrative arrangements for the use of these instruments. Finally, the LMT policy must be part of the broader policy document for the liquidity risk management of the fund. Partial transitional regime available for existing funds By 16 April 2026 at the latest, managers must have selected at least two LMTs for the open-end funds they manage. For the selected LMTs, managers must also have established the policy and procedures for activation and deactivation by 16 April 2026. Investment undertakings established before 16 April 2026 may use a transitional period of one year, exclusively for the practical implementation of the specifications of the characteristics and features of the selected LMTs. These are described in Delegated Regulation (EU) 2026/465 (for AIFs) and Delegated Regulation (EU) 2026/466 (for UCITS), as well as in the ESMA guidelines on LMTs. This is therefore a partial transitional provision where managers must comply with part of the provisions from 16 April 2026, but have an extra year for part of the implementation. Modified reporting procedure for LMT-related reports from 18 March 2026 Managers must report the selected LMTs to the AFM. In addition, they must inform the AFM of the LMT policy. Finally, managers must inform the AFM when LMTs are activated or deactivated.1

• The activation or deactivation of the suspension of subscriptions, redemptions, and repayments must be reported to the AFM without delay.
• The activation or deactivation of side pockets must be reported to the AFM in advance, within a reasonable time frame.
• For all other selected LMTs, activation or deactivation must be reported to the AFM without delay, insofar as these LMTs are activated or deactivated "in a manner that does not fit normal business operations, as provided for in the fund regulations, terms, or articles of association". Managers must have a substantiated elaboration regarding what is considered circumstances that do not belong to normal business operations.
  1 For managers of investment undertakings, this appears from the following pending articles: article 4:37h, fifth paragraph and article 4:37i, second paragraph and article 4:37ib Wft; or for managers of UCITS, this appears from the following pending articles: article 4:45a, second paragraph, article 4:54a, second paragraph and article 4:55 Wft.

AIFMD 2 update 3 - Liquidity management tools (LMTs) 3 From 18 March 2026, a modified reporting procedure is available for LMT-related reports. These reports must be submitted via the AFM portal.
For existing funds in which changes occur in the context of LMTs, reports can be submitted via the portal using a specific form. Via this form, an adapted prospectus must be provided at least. Managers may also choose to send the adapted fund regulations/terms or articles of association and the adapted LMT policy along with it. This report must be submitted by 16 April 2026 at the latest. If there are questions about the report made, the AFM may request further information. For existing funds in which no material changes take place in the prospectus and/or the relevant LMT policy (because they, for example, already complied with the requirements under AIFMD II), the AFM expects to collect data on the chosen LMTs at a later stage. Outlook Over the past few months, the AFM has provided managers with explanations and insights to promote careful preparation for AIFMD II. In addition to LMTs, attention has been paid, among other things, to new requirements for daily policy makers and investment undertakings that initiate loans. The AFM intends to further update its AIFMD II webpage on the AFM website in the lead-up to 16 April 2026. It is therefore advisable to keep this well under observation. This publication was issued on 17 March 2026.