meta_id 3127917

On May 6, 2026, the Cyprus Securities and Exchange Commission (CySEC) issued Circular No. C776 to inform Cyprus Investment Fund Managers (CIFMs) of new guidelines on Liquidity Management Tools (LMTs) for Undertakings for Collective Investment in Transferable Securities (UCITS) and open-ended Alternative Investment Funds (AIFs). The guidelines, published by the European Securities and Markets Authority (ESMA) on March 12, 2026, implement mandates established under Directive (EU) 2024/927, which amends the UCITS Directive and Alternative Investment Fund Managers Directive (AIFMD). The guidelines aim to enhance fund resilience under normal and stressed market conditions, ensure appropriate selection and calibration of LMTs based on investment strategy and liquidity profiles, and promote investor protection by mitigating liquidity mismatches and reducing dilution risks. Under the new provisions, UCITS management companies and AIFMs must select at least two appropriate liquidity management tools following a suitability assessment. They may temporarily suspend subscriptions, repurchases, and redemptions in investors' interests, or activate other LMTs including side pockets where provided in fund documentation. CySEC expects CIFMs to review and enhance their liquidity risk management frameworks, ensure LMTs align with fund characteristics, establish robust governance arrangements with clear decision-making processes, apply LMTs fairly and transparently, adequately disclose LMT availability in offering documentation, and ensure staff possess necessary expertise and appropriate systems are in place. The guidelines apply from April 16, 2026, for new funds. For existing collective investment undertakings, the guidelines apply from April 16, 2027—twelve months after the Regulatory Technical Standards implementation date. CySEC has incorporated these guidelines into its supervisory practices, and CIFMs must ensure compliance accordingly.