On December 4, the European Securities and Markets Authority (ESMA) updated its Questions and Answers (Q&A) on the application of the Alternative Investment Fund Managers Directive (AIFMD).

The new question concerns the apparent conflict between Article 24(2) AIFMD, which requires managers of alternative investment funds (AIFMs) to report results of liquidity stress tests for all of the alternative investment funds (AIFs) that they manage, and Article 16(1) AIFMD, which exempts managers of closed-ended unleveraged AIFs from conducting liquidity stress tests.

ESMA’s response is that, should the AIFM chose to conduct liquidity stress tests for unleveraged closed-ended AIFs, it should report the results in the appropriate field as with any fund. However, if the AIFM does not conduct such tests, then they can say the question is “Not Applicable” and indicate in that field that the relevant fund is a closed-ended unleveraged AIF.

The updated Q&A is available here.