Treatment of an institution’s investments into EU AIF managed by a non-EU AIFM and into closed-ended CIUs

Should not the investment of an institution into a closed-ended CIU which has been marketed in accordance with Article 42 of AIFMD, but is not marketed anymore due to the end of its marketing phase, remain eligible to apply the look-through to the underlying exposures of the CIU, provided the other relevant conditions for looking-through continue to be met?

Article 132 (as modified by Regulation (EU) 2019/876) defines the own funds requirements for exposures in the form of units or shares in CIUs.   A look-through approach, defined under Article 132a, may apply where a test consisting in three cumulative conditions is fulfilled.   The first condition, established by Article 132 (3) (a) of CRR, relates to the nature of the CIU invested in.   Among the (6) categories of funds listed, the fifth refers to "a non-EU AIF managed by a non-EU AIFM and marketed in accordance with Article 42 of Directive 2011/61/EU".                    Based on the list of CIUs potentially eligible to the look-through, there may be some uncertainty regarding the own funds requirements required for an institution's investment into a closed-ended CIU which has been marketed in accordance with Article 42 of AIFMD, but is not marketed anymore.   Notably, private equity funds are invariably closed-ended; investors in private equity have thus no right to redeem their commitments or investments. Closed-ended funds therefore have a marketing phase which is limited in time, the subscription period taking place only at the beginning of the lifetime of the fund. Past this period, new investors cannot acquire units or shares of the AIFs but will continue making commitments to the funds until the end of its life. However, there is no full clarity as to whether a closed-ended CIU which has been marketed, for example in accordance with Article 42 of AIFMD, but is not currently marketed anymore, would remain eligible to apply the look-through to the underlying exposures of the CIU.   We note that point (v) does not refer to funds which are "being marketed" or "currently marketed" in accordance with Article 42 of Directive 2011/61/EU. Closed-ended funds, just like open-ended funds, are subject to the same requirements when marketed pursuant to Article 42 of AIFMD.   We note also that the wording of Article 132 paragraph 3 does not make any distinction between open-ended and closed-ended CIUs; arguably, the same regulatory treatment and look-through approach should apply, provided the other relevant conditions are fulfilled. Crucially, what matters is that transparency is ensured with respect to the underlying exposures of the CIUs, so as to facilitate the institutions' adequate management of their exposures in the form of units or shares in CIUs, and ultimately, the fact that an eligible fund stops being marketed does not alter or affect the effectiveness of the transparency obligations.  Legal certainty would be protected, and unintended effects avoided, through the confirmation that an institution's investment into a closed-ended CIU which has been marketed in accordance with Article 42 of AIFMD, but is not marketed anymore, continues to be eligible for the same prudential treatment under Article 132, paragraph (3) of CRR.