Recital 21

(21)Long-term, illiquid loans held by an AIF could create liquidity mismatches if the AIF’s open-ended structure allows investors to redeem their units or shares frequently. It is therefore necessary to mitigate the risks related to maturity transformation by imposing a closed-ended structure for loan-originating AIFs. It should however be possible for loan-originating AIFs to operate as open-ended provided that certain requirements are fulfilled, including a liquidity management system that minimises liquidity mismatches, ensures the fair treatment of investors and is under the supervision of the competent authorities of the home Member State of the AIFM. In order to ensure consistent criteria for the determination by the competent authorities of whether a loan-originating AIF can maintain an open-ended structure, the European Supervisory Authority (European Securities and Markets Authority) (ESMA) established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council ⁹ should develop draft regulatory technical standards to establish those criteria, taking due account of the nature, liquidity profile and exposures of loan-originating AIFs.