Agefi Luxembourg - juin 2026

AGEFI Luxembourg 24 Juin 2026 Fonds &Marchés L iquiditymanagement used tobe just one topic amongmany. Today, it is the topic. For over a decade, international regu­ latorybodies – notably IOSCO (1) and the Financial StabilityBoard (2) – have high­ lighted the structural tension betweenoffering frequent redemption rights and inves­ ting in less liquid, higherre­ turning assets. These concerns are grounded in economic theory, (3)(4) as inves­ tors value the ability to re­ deematwill and institutions that turn less liquid assets into liquid claims are inhe­ rently fragile under stress. The issue has been centrestage since COVID19. The industry weathered the COVID19 crisis reasonablywell,butitstillexposed new challenges. Openended real estate funds were under the spot­ lightandunderheavyredemption pressure, several funds gated or deferred proceeds. The difficulty was not due to a lack of tools but rather a lack of preparation and familiaritywithpractice. The AIFMD 2 and UCITS 6 reforms are not meant to remedy insufficiently robust liquidity management,buttobringconver­ gence, as regulators want man­ agersworkingfromcommoncon­ cepts andobligations. The approach remains flexible with the decision of which LMTs to choose being left the responsi­ bility of managers. What changes is that liquidity becomes a shared subject, with a sharedvocabulary. Two frameworks, a converging approach UCITS and AIFs are structurally different, yet the framework bringstheirliquiditymanagement tools (LMTs) closer together. The key distinction lies not in specific tools, but in their structural char­ acteristics. UCITS rest on a promise of fre­ quent, usually daily, liquidity. LMTs such as swing pricing or antidilution levies act as price­ adjustment mechanisms, allocat­ ingtransactioncostsbetweensub­ scribing and redeeming investors withoutchangingredemptionfre­ quency. AIFs, by contrast, often accommodate less liquid strate­ gies. For suchAIFs, LMTs such as redemption gates (or, recently, extended notice periods) are inte­ gral to the product’s design: they managenotpricingbutthetiming and conditions of liquidity. AIFMD 2 and UCITS 6 broadly alignLMTavailability across both regimesthroughaharmonisedlist. UCITSandopenendedAIFman­ agersmust select at least two tools from it (redemption gates, exten­ sionofnoticeperiods,redemption fees, swing pricing, dual pricing, antidilution levies and redemp­ tion in kind), with suspension of dealings and side pockets also available as structural tools. Each tool’s characteristics are now set out in binding technical stan­ dards, applying in Luxembourg from 16 April 2026, with existing funds having until 16 April 2027 to align their documentation. However, convergence does not erase the fundamental econom­ ic and structural differences between the regimes. Evenwith the same tool, its function, cali­ bration and role may differ markedly across products. Gates and investor perception Recentmarket episodes involving semiliquidstructures (5) haveillus­ trated the sensitivity around acti­ vating certain LMTs. The market often reads redemption con­ straintsasasignofstress,prompt­ ingscrutinyandadversereactions thatmay exacerbate the situation. This is reinforced by the first­ mover advantage: where a fund holdslessliquidassets,thosewho redeem first are paid out of the most liquid holdings, leaving a less liquid portfolio behind. That creates an incentive to redeem early, which is precisely the dynamic LMTs aremeant to neu­ tralise. This trendhas been visible recently in the US among large private credit platforms – includ­ ing funds managed by HPS (BlackRock) and Blue Owl – where redemption limits drew significant attention. Such reac­ tions areunderstandablebutmay reflect an overly immediate read­ ingofmechanismsmeanttooper­ ateaspart of thenormal function­ ing of semiliquid structures. These products are, by nature, less than fully liquid. They carry detailed risk disclosures and tar­ get investors who do not need immediate access to capital, so redemption constraints are typi­ cally embedded in the contract from inception. Thepurposeof LMTs isnot to sig­ nal distress but to let managers manage liquidity pressures in an orderly way, such as structuring outflows so as to avoid forced sales. Thematch between a fund’s assets and its redemption terms is structural, and activating an LMT reflects liquidity being managed, not a fund indifficulty. The challenge is that the market does not yet read it this way, thoughAIFMD2shouldhelpshift that over time. Inaddition, there is a growing legal argument that in­ troducing and activating these tools is not a disadvantage for in­ vestors, precisely because they serve investors as awhole. Activating such tools is an aspect of forwardlooking risk manage­ ment that supports the fair treat­ ment of investors, redeeming and remainingalike.Theynonetheless highlight investor perception, re­ vealing misalignment between contractual provisions and in­ vestor expectations, especially whereLMTs aredisclosed in legal terms but not adequately ex­ plained. Communication there­ fore remains central to implemen tingLMTs effectively. The tools inpractice ForUCITS,antidilutiontoolssuch as swingpricing and antidilution levies are still the primary instru­ ments for managing liquidity­ related costs. They are sometimes complemented by redemption gates, but although redemption gates are an established feature of many UCITS funds and more commonly accepted than inAIFs, they remain a last resort due to investor sensitivity. For AIFs, the range of tools is broad, but its use is shaped by each fund’s structure. Quantita­ tive tools, suchas extendednotice periods and gates, are particu­ larly well suited to the ordinary functioning of certain strategies. ESMA’s approach in recom­ mending rather than requiring the selection of at least one quan­ titative and one antidilution tool is sensible, since antidilution tools are genuinely hard for manyAIFs to implement and do not have the same impact. Moreover, many semiliquid structureshardwireupfrontquar­ terly liquidity limits, often at 5% of net asset value, before even considering LMTs. Redemptioninkindwarrantspar­ ticular care. While it may some­ times be useful, systematically relyingonittomeetthetwoLMTs requirement, especially when it is subjecttoinvestorconsent,ignores the harsh reality that redemption in kind more often than not be­ comesunworkableinpracticeand isshunnedevenbylargeinvestors. Market practice following AIFMD2 andUCITS 6 Implementing the AIFMD 2 and UCITS6frameworkshasprompt­ ed extensive discussion across Europe. UCITS managers have largely treated the changes as a matter of clarification and har­ monisation, while for AIF man­ agers they have often provided a timely reminder of the central role that liquidity risk has in open­ ended structures. Threethemesemerged:(i)preserv­ ing operational flexibility, notably in calibrating LMTs and drafting disclosures; (ii) communication with investors and regulators, giventhereputationalimplications of activating these tools; and (iii) robust internal organisation that includesclearandcomprehensive policies and their testing. While many managers already have good foundations, almost every­ one hadfinetuning todo. Where implementation challenges arise In practice, the effectiveness of LMTsdepends largelyon the ease of implementation. Governance is key. AIFMD 2, UCITS 6 and the ESMAguidelines takeaprinciple­ basedapproach,leavingmanagers with considerable discretion over their internal frameworks. That degree of flexibility is deliberate, but also creates some legal and supervisoryuncertainty. Robustgovernancerequiresclear­ ly defined escalation procedures, internal reporting channels and designated decisionmakers, sup­ ported by staff training and regu­ lar stress testing. Data quality also remains a key constraint, particu­ larly for less frequently valued assets, affecting both calibration and the timing of activation. Investor communication is equal­ lycritical.BeyondincludingLMTs in prospectuses, managers must consider how they are actually explained to investors. The answer may be to communicate more, and not only around catas­ trophic events. For example, explainingunder normal circum­ stances that a sixmonth gate can bearoutine,protectivefeaturelets investors grow familiar with the concept without every activation triggering systemic stress. Clarity and consistency can matter as much as legal validity. Conclusion Liquidity management tools are notnew,butAIFMD2andUCITS 6 have clarified their role and broughtthemintoacommon,con­ verging framework. Liquidity management is ultimately about thefairallocationofrisksandcosts among investors, and alignment between product features and investor expectations. The effec­ tivenessofLMTsdependsontheir integration into broader gover­ nance,operationalandcommuni­ cation frameworks. For Luxembourg, these require­ ments are an opportunity to showcase consistent, highquality practices across a diverse fund ecosystem. AIFMD 2 and UCITS 6 provide an opportunity to rebrand LMTs from the nuclear optiontoabedrockofresponsible, everyday liquiditymanagement. Grey areas remain – for instance, there is far from a consensus on what exactly falls within the “ordinary course of business” – but thegoal of harmonisationhas been met: from the very start of implementation, we have seen similar disclosures, shared prac­ tices, and managers speaking a common language. PiotrGIEMZAPOPOWSKI,Partner, AllisonNORIE,Counsel, XavierMANGEARD,Counsel, SamuelBORALEVIMERLE,Associate, Arendt&Medernach 1) IOSCO, AntiDilution Liquidity Manage­ ment Tools — Guidance for Effective Imple­ mentation,IOSCO,December2023.Available at: iosco.org . 2)FinancialStabilityBoard,Assessmentofthe Effectiveness of the FSB’s 2017 Recommenda­ tions on Liquidity Mismatch in OpenEnded Funds, FSB, Basel, December 2022. Available at: fsb.org . 3) Keynes, J.M., The General Theory of Em­ ployment, Interest and Money, Macmillan, London, 1936. – Foundational articulation of liquidity preference as a driver of investor be­ haviourunderuncertainty. 4) Diamond, D.W. & Dybvig, P.H., “Bank Runs,DepositInsurance,andLiquidity,”Jour­ nalofPoliticalEconomy,Vol.91,No.3,pp.401­ 419, 1983. – Seminal model of structural fragility arising from dailyliquidity promises against illiquidportfolios. 5)AlexanderDavis–“PrivateCredit’sLiquid­ ity Squeeze Puts Lenders in a Tight Spot” – Morningstar,12May2026. From compliance to governance: Liquidity management tools underAIFMD 2 and UCITS 6 By Bruno COLMANT, Ph.D., Member of the Royal Academy of Belgium T he nightmare of central banks is no longer theoretical. It is unfolding now, in real time. A recent article in the Financial Times described central bankers as “shamans,” a striking metaphor for officials who increasingly govern through psychology, communication, and ritualized signals as much as through ac­ tual control over the economy. Markets no longer react only to interestrate decisions; they scrutinize every nuance of lan­ guage, every hesitation, every sentence uttered by the heads of central banks. But the difficulty today is that reality is slipping out of their control. Energy inflation, initially seen as temporary, is spreading across the entire economy. Transportation,manufacturing, food, housing, and services are all being contaminated by higher energy costs. At the same time, public debt levels remain historically high after the pan­ demic and successive economic support plans. This combination keeps longterm interest rates elevated, especially in theUnited States, where debt refinancing is becoming increasingly burdensome. The historical parallel with the 1970s is becoming impossible to ignore. The memory of Arthur Burns, the Federal Reserve chairman under RichardNixon, haunts today’s cen­ tral bankers. Nixon feared a reces­ sion ahead of the 1972 election and pressuredBurns tomaintain accom­ modative monetary policies despite rising inflationarypressures. Burns ultimate­ ly yielded to political pressure. Rates remained too low for too long, inflation became embedded in expectations, and theUnited States entered the stagflationary nightmare of the 1970s: weak growth, rising unemployment, and persistent inflation. The lesson remains brutal. Inflation is manageable when it is temporary. It becomes dangerous when society begins to expect it permanently. This is pre­ cisely the risk today. Energy shocks, geopolitical instability, industrial fragmentation, andagingpop­ ulations are creating structural inflationary pres­ sures that central banks cannot easily neutralize through conventional monetary policy alone. Political instability in theUnitedStates adds another layer of uncertainty.Aprobable Democratic victory in themidtermelections could further intensify the unpredictability of Donald Trump and deepen ten­ sions within American institutions. Financial mar­ kets canabsorbpolitical disagreement, but they fear institutional instability because the United States remains the anchor of the global financial system. Central banks, therefore, find themselves trapped. If they raise rates aggressively, they risk triggering a severe recession, destabilizingdebtladengovern­ ments, andweakening financialmarkets. But if they hesitate or ease policy too early, inflation may become structurally entrenched, eroding purchas­ ing power and destroying the credibility of mone­ tary institutions. This is why many central banks, including the European Central Bank and the Federal Reserve, may ultimately tolerate moder­ atelyhigher inflation rather than impose excessive­ ly restrictive policies. Inflation silently reduces the real value of public debt, which is politically tempting for heavily indebted states. But this strategy carries heavy long­ termcost: weaker currencies, impoverished savers, distorted investment decisions, and the growing risk that inflation expectations become permanent­ ly unanchored. The deeper issue is that central bankers are no longer facing a purely technical dilemma. They are confronting aprofoundlypolitical and social choice. The comparison with Arthur Burns matters because his failure was not sudden. It emerged gradually throughhesitation, compromise, and the refusal to impose immediate economic pain. That is the real fear haunting central banks today. Not that history repeats itself exactly, but that they once again sacrifice longterm monetary stability for shorttermpolitical and financial survival. The era of easy solutions is over. The Fed’s 1970s ghost is back