The European Parliament has approved amendments to the framework governing European Long-Term Investment Funds (Eltif).
The European Commission suggested its change in November 2021.
The regime has been modified in the hopes of making the Eltif the go-to structure for ordinary investors interested in long-term assets.
Green bonds, fintechs, STS securitisations - a simpler definition of'retail assets' - and a higher market capitalisation level are among the new regulations' acceptable assets.
Eltifs will also be allowed to use leverage by investing in a fund of funds and master-feeder arrangements.
The prior €10,000 entry ticket, as well as the minimum net worth criteria, have been removed to expand access to retail investors.
The Eltif's appropriateness test has also been matched with that of Mifid II in order to enhance regulatory harmonisation and reduce compliance burdens.
The European Fund and Asset Management Association has praised these changes (Efama).
“As the new criteria have finally been brought in line with what is required to make the product an attractive and competitive long-term investment structure, the redesign of Eltif is generating a great deal of interest among industry participants,” said Efama regulatory policy adviser Elona Morina.
These new rules are scheduled to be published in the EU's Official Journal in March, with implementation beginning in the first quarter of 2024.
Older Eltifs will remain compliant for five years following the implementation of Eltif 2.0.
By fLEXI tEAM