New rules to make long-term investment funds clearer

For compliance teams, this means a fundamental review of fund documentation, prospectuses, and terms of business to reflect the new notice period and ensure clear investor disclosure on access to capital. Asset managers must reassess liquidity risk management frameworks, including stress testing and cash buffers, and update redemption policies and operational processes. Distribution and client-facing teams need to explain the changes to investors, particularly in wealth and retail channels.

The rules also signal a broader supervisory focus on private market valuations and market stability. Firms should engage with depositaries, auditors, and legal counsel to implement changes, and consider whether existing fund structures (e.g., UCITS, non-UCITS, LTAFs) require renegotiation or investor consent. The 90-day notice may reduce daily dealing features, potentially affecting fund attractiveness but improving resilience.

Compliance actions include updating KIIDs, prospectuses, and shareholder communications; revising liquidity management policies; and training staff. Business opportunities exist for managers with robust liquidity frameworks to attract long-term capital and for service providers offering liquidity risk technology. Risks include investor backlash, fund outflows, and operational challenges if systems are not updated.

Affected firms should treat this as a strategic priority, with board-level oversight. Overall, this is a significant regulatory development requiring proactive implementation.