For management companies and depositaries, the question is no longer whether they need to address liquidity management tools (LMTs), but how early and how systematically they structure the process. All liquidity management tools pursue the same objective: to manage liquidity risks and mitigate adverse effects for remaining investors. Yet they differ significantly in their impact, depth of intervention and operational implementation. This makes a well-founded selection and combination essential – aligned with the product, investor base and prevailing market conditions.

This is precisely where Profidata comes in. With XENTIS, we provide an Investment Management Software solution that does not treat liquidity management tools in isolation, but understands them as an integral component of holistic fund management. Its modular architecture allows different LMT building blocks to be flexibly combined and embedded into existing workflows – tailored to fund structure, investment strategy and regulatory requirements.

What is decisive is not merely the technical representation of individual instruments, but the integration of system functionality with practical implementation expertise. At Profidata, we support our clients in translating liquidity management tools into clearly defined processes, governance structures and decision-making frameworks – and in ensuring their consistent alignment between management company and depositary.

New regulatory obligations from April 2026 

According to the current status, AIFMs and UCITS management companies are expected to be required, from April 2026 onwards, to apply at least two appropriate liquidity management tools. The selection of these instruments lies with the management company. It must disclose the chosen LMTs transparently in the prospectus and embed them within a clearly defined governance framework. Depositaries, in turn, are required to reflect these mechanisms within their systems and support them reliably in day-to-day operations. It is therefore evident that liquidity management is evolving from a purely regulatory obligation into a strategic consideration – with direct implications for processes, systems and organisational structures.

The regulatory framework currently provides for nine liquidity management tools. These include, among others, the suspension of subscriptions and redemptions, redemption gates, notice periods, redemption fees, side pockets and in-kind redemptions. These mechanisms are complemented by pricing tools such as dual pricing or anti-dilution measures designed to protect against dilution effects.

Among the available instruments, swing pricing occupies a particularly prominent position. Under this mechanism, a fund’s net asset value is adjusted depending on net inflows or outflows. Transaction and liquidity costs are taken into account through so-called swing factors. The benefit is clear: investors whose subscriptions or redemptions trigger liquidity movements bear the associated costs themselves. Dilution effects to the detriment of long-term investors are reduced and transparency in fund valuation is enhanced.

Swing pricing is already successfully implemented by many XENTIS clients. It is supported through clearly defined transaction types, metrics and FINAL logics, enabling an audit-proof and transparent calculation process.

Governance, transparency and operational control

The new requirements call for clearly defined decision pathways, documented thresholds and consistent implementation across the interconnected systems of all parties involved. This includes the ability to trigger liquidity management tools when required, monitor their application and present them transparently to supervisory authorities and investors. It is here that the value of an integrated system approach becomes particularly evident. Within XENTIS, LMT-relevant controls, business rules and interfaces can be configured so that governance requirements and operational workflows interact seamlessly. Liquidity management thus becomes a controllable and transparent component of overall fund management.

Act now and unlock new potential

 The new EU regulatory provisions make one point unmistakably clear: liquidity management tools are evolving into a central element of fund governance. Those who act early not only ensure regulatory certainty but also strengthen operational steering capabilities and investor confidence. With XENTIS and Profidata’s implementation expertise, regulatory requirements can be translated into practical, robust solutions. The EU regulation sets the framework – the quality of implementation determines long-term success.

Would you like to learn more? Our expert Ingo Zickmann will be pleased to discuss any questions you may have regarding liquidity management tools and their practical implementation in a personal exchange.