The regulatory revision of the legal framework for the European Long-Term Investment Fund (Eltif), known as Eltif 2.0, presents numerous challenges for asset management companies and custodians, according to Rudolf Siebel, Managing Director of the German Fund Association (BVI). Several key elements are still not precisely specified in the form of delegated acts or implementing regulations. For example, the implications for liquidity management are not yet entirely clear, Siebel explained at the "Verwahrstellen und KVG Summit 2024" hosted by Faros and Börsen-Zeitung.

Siebel praised the regulatory update, stating that the association and its members welcome the revision of the regulatory framework for the long-term fund structure. He highlighted that the initial attempt by European legislators in 2015 to create a long-term format "had failed", mainly due to oversized distribution rules. This has been rectified by the EU Commission, the EU Parliament, and the Council with the update of the framework. The legislators have streamlined and made Eltif marketable, leading to increased consideration of Eltif launches by fund companies.

In addition to Eltif, Siebel identified other regulatory challenges for asset management companies and custodians, such as Brussels' ESG requirements, including rules for naming sustainable funds. The BVI also anticipates a new categorization of sustainable funds in replacement of the Article 8/Article 9 scheme as part of the review of the EU Disclosure Regulation.

Furthermore, market participants in fund administration need to prepare for the new framework concerning the tokenization of fund shares, with the German government being a legislative pioneer in this regard. Lastly, compliance with the T+1 settlement requirement in the United States poses challenges for fund service providers, particularly concerning cash management.