ESMA published two (draft) documents today, both of which relate to the use of so-called liquidity management tools (LMT). The AIFM Directive and the UCITS Directive were recently amended in order to include more detailed rules on such tools (even though in practice most of these have been in use for a long time), with the objective to provide more transparency to investors and promote a better liquidity management of AIFs and UCITS.

• The first document is a draft version of the so-called regulatory and technical standards (RTS) for both AIFs and UCITS; it is mostly descriptive in nature and provides some more details on those LMTs that were mentioned in both directives. These RTS will need to be reviewed by the European Commission (within 3 months) before they can enter into force.

• The second document are guidelines relating to the same LMTs, and more precisely how each LMT should be used and in which situations their application would appear most useful. As these guidelines are of course connected to the aforementioned RTS, they will only apply once the RTS have been finalised and enter into force; and there is an additional 12-months grace period for existing funds before they should apply the guidelines.