Managing liquidity with confidence: What the new CSSF LMT procedure means for Luxembourg fund managers

A new reporting baseline for ManCos and AIFMs

By 16 April 2026, all UCITS management companies and authorized AIFMs must submit to the CSSF, via eDesk:

• Their selection of available Liquidity Management Tools, and¹
• The policies and procedures governing how and when those tools may be activated or deactivated

Importantly, this information is not a one‑off filing: it must be kept up to date on an ongoing basis, reflecting changes to fund documentation, operating models, or liquidity risk profiles. In practice, this establishes a living regulatory baseline against which supervisory expectations will be assessed.

Real‑time visibility on liquidity stress events

From 16 April 2026 onwards, UCITS ManCos and authorized AIFMs must also notify the CSSF whenever certain LMTs are activated or deactivated, including:

• Suspensions of redemptions, repurchases or subscriptions
• Any LMT used outside the ordinary course of business
• Side pockets, which must be notified within a reasonable timeframe before their activation or deactivation

This introduces a new level of real‑time supervisory visibility into liquidity stress events and reinforces the importance of clear escalation and communication mechanisms.

A broader scope than many might expect

One important clarification from the CSSF concerns fund vehicles that fall outside the classic AIFM perimeter. Part II UCIs, SIFs and SICARs that either do not qualify as AIFs, or are not managed by a Luxembourg‑authorized AIFM, must nevertheless use the LMT activation module to notify the CSSF about side pockets and suspensions of redemptions, repurchases or subscriptions.

Operational and governance challenges

Although formally presented as a reporting exercise, the new CSSF LMT procedure has far‑reaching practical implications. Fund managers will need to take a fresh look at how liquidity tools are embedded across their operating model, including:

• Documentation versus reality: ensuring that LMTs disclosed in fund prospectuses and policies are not merely theoretical, but fully operational and executable in stressed scenarios
• Governance and accountability: clearly defining who takes the decision to activate or deactivate an LMT, based on which triggers, and supported by documentation and oversight
• Coordination with key stakeholders: aligning administrators, depositaries and portfolio managers on escalation pathways, execution timelines and communication protocols
• Consistency across product ranges: demonstrating coherence in LMT selection for comparable strategies, or a well‑reasoned justification where approaches differ

Against the backdrop of AIFMD II and UCITS VI, liquidity management is no longer a pure technical exercise. It increasingly tests the robustness of governance frameworks, decision-making discipline and an organization’s ability to act decisively under pressure. 

How EY can help you

EY Luxembourg supports fund managers at every stage of this transition, combining regulatory insight with hands‑on implementation support. In particular, we can help you:

• Assess applicability and scope across your fund structures
• Review and rationalize your LMT selection in light of investment, liquidity, investor profiles and distribution channels
• Draft or enhance policies and procedures, aligned with CSSF expectations and AIFMD II / UCITS VI requirements
• Strengthen governance and escalation frameworks, including board‑level decision processes
• Support eDesk filings and notifications, ensuring accuracy, consistency and timeliness
• Prepare for supervisory dialogue, including documentation and dry‑run scenarios