ELTIF RTS Timeline - Final Countdown for the ELTIF 2.0 rules

The legislative process of reviewing the ELTIF regime initially launched in 2020 is coming to completion. The ELTIF RTS are expected to become applicable by the end of 2024. This will pave the way to the authorisation of dozens of ELTIFs that are currently held back by the pending uncertainties of the legislative process.

Original ELTIF regime (2015)

• Proposal: The European Commission proposed the ELTIF Regulation in June 2013.
• Adoption: The European Parliament and Council adopted the ELTIF regulation on 29 April 2015.
• Entry into force: Regulation (EU) 2015/760 entered into force on 8 June 2015.
• Application: The regulation became applicable from 9 December 2015.

ELTIF 2.0 Review Process

• Review: The Commission conducted a review of ELTIF rules as per Article 37 of the original Regulation (EU) 2015/760.
• Proposal: On 25 November 2021, the Commission proposed amendments to the ELTIF Regulation (COM(2021)722).
• Political agreement: The European Parliament reached a political agreement on the ELTIF 2.0 reforms in October 2022.
• Formal adoption: ELTIF 2.0 was formally adopted through Regulation (EU) 2023/606 on 15 February 2023.
• Entry into force: Regulation (EU) 2023/606 entered into force on 8 April 2023.
• Application: The ELTIF 2.0 regime entered into application on 10 January 2024 (link to the consolidated version). 

Regulatory Technical Standards (RTS)

• ESMA's draft RTS: ESMA was mandated to draft the Level 2 RTS specifying certain elements of the ELTIF 2.0 Regulation. ESMA submitted its draft ELTIF RTS to the European Commission in December 2023.
• Commission's decision: However, the Commission found ESMA's draft RTS did not sufficiently cater to the features of different ELTIF investment strategies. In early March 2024, the Commission adopted the technical standards with amendments calling for "a more proportionate approach", especially around redemption policies and liquidity management tools. 
• ESMA's final draft ELTIF RTS: In April 2024, ESMA issued its final opinion on the ELTIF RTS.

Next Steps

• Adoption of the ELTIF RTS: According to the ESMA Founding Regulation, the Commission has the competence to "adopt the regulatory technical standard with the amendments it considers relevant".
• Objection period: Both the European Parliament and the Council may object to a regulatory technical standard within a period of three months from the date of notification of the regulatory technical standard adopted by the Commission. At the initiative of the European Parliament or the Council that period shall be extended by three months.
• Publication and application: If approved, the final Commission Delegated Regulation will be published in the Official Journal and will enter into force and into application within a few days of the expiry of the scrutiny period. This means that the ELTIF RTS will enter into application before the end of 2024 (likely November 2024), or in early 2025 if the Parliament or the Council extend the scrutiny period.

This process will complete the full legislative framework for ELTIF 2.0, with the Level 1 Regulation and supplementary Level 2 RTS in place.

Conclusions

In summary, while the core ELTIF 2.0 Regulation has already been adopted and will apply from January 2024, the supplementary technical standards are still working their way through the EU process. The final publication of the RTS expected later in 2024 will mark the completion of the revised ELTIF 2.0 regime at the EU level.