CySEC C743: Liquidity Management Tools: What Fund Managers Must Now Be Able to Evidence
Status — June 2026: The CySEC filing window (27 February 2026) has closed and the requirements apply from 16 April 2026. If you have not yet completed your liquidity management tool embedding, the obligation remains in full force. This article explains what you need to have in place and be able to evidence.
Timeline at a glance
| Date | Event |
| 19 December 2025 | CySEC Circular C743 issued |
| 27 February 2026 | CySEC’s urged filing deadline |
| 16 April 2026 | Requirements apply (Directive (EU) 2024/927 transposed) |
| June 2026 onwards | Supervisory review period |
If you manage an open-ended AIF or UCITS in Cyprus and you have not yet embedded liquidity management tools in your fund rules, you are now in breach. That is what CySEC Circular C743, issued on 19 December 2025, makes clear.
Most managers already operate some form of liquidity tool in practice. What C743 changes is the evidence requirement. You now need a documented, board-approved, fund-by-fund record showing which tools you selected, why those tools — and not others — suit your fund’s strategy and redemption profile, and that the selection is reflected in your constitutional documents and filed with CySEC. That paper trail is what a supervisory review will look for first.
What C743 actually requires you to evidence
CySEC C743 implements the liquidity management provisions of Directive (EU) 2024/927 (the AIFMD II and UCITS review). The obligation is straightforward in principle: each open-ended AIF and UCITS must select at least two appropriate liquidity management tools (LMTs) from a harmonised EU list of nine and embed them in its fund rules, instruments of incorporation or partnership agreement.
A narrower rule applies to money market funds within the meaning of Regulation (EU) 2017/1131: such a fund may select a single LMT rather than two. Two of the nine tools — suspension of subscriptions, repurchases and redemptions, and side-pockets — sit outside the “select at least two” pool. These may be activated in exceptional circumstances in investors’ interests even where they have not been specifically pre-included in the fund rules.
The nine harmonised tools are:
1. Suspension of subscriptions, repurchases and redemptions
2. Redemption gate
3. Extension of notice periods
4. Redemption fee
5. Swing pricing
6. Dual pricing
7. Anti-dilution levy
8. Redemption in kind
9. Side-pockets
Your fund must select at least two from items (2) to (8). The selection cannot consist only of swing pricing and dual pricing together.
Nine tools. Your fund needs at least two. The harder question is which two, and why — and that question is exactly where evidence gaps tend to appear.
The evidence gap: where supervisory attention lands
In practice, the most common gaps are not in understanding the rule but in the evidence trail. Suitability assessments are sometimes performed but not documented to a standard that withstands supervisory review. Board or senior-management approval is not clearly minuted. Constitutional amendments are drafted but the link back to the suitability assessment is thin. Investor disclosures are not reconciled with the embedded tools. The filing timetable has no named owner.
Controls that exist in principle but cannot be evidenced are, for supervisory purposes, controls that are difficult to rely on.
The C743 exercise is a board-level liquidity risk decision, not a documentation formality. The documented suitability assessment — showing why each selected tool fits your fund’s investment strategy, liquidity profile and redemption policy — is the centrepiece. Without it, the rest of the exercise is incomplete.
The suitability assessment: what it must cover
For each in-scope fund, the manager (or self-managed entity) must carry out and document a suitability assessment before selecting the tools. The assessment must consider:
· **Investment strategy:** what assets the fund holds, how liquid they are in normal and stressed conditions, and over what timeframe positions can be reduced.
· **Liquidity profile:** concentration, investor base (institutional vs retail), redemption frequency, and likely redemption patterns under stress.
· **Redemption policy:** notice periods, frequency windows, redemption limits currently in place.
The assessment should explain why the selected tools fit those characteristics and why tools not selected were considered unsuitable or unnecessary for this fund. A generic assessment applied across all funds in a range without fund-by-fund analysis will not meet the standard.
Fund documentation and constitutional amendments
The selected LMTs must be written into the fund rules, instruments of incorporation or partnership agreement, depending on the fund’s legal form. This is the operative step C743 is concerned with: the assessment and the board approval must translate into clear constitutional language describing which tools are available and the conditions for their use.
For common-fund UCITS, the notification to CySEC is made jointly with the depositary, so depositary coordination must be factored into the timetable — including for managers who have already passed the February 2026 window and are now catching up.
Investor disclosures
Selecting a tool and embedding it in the fund rules is not the end of the exercise. Where investor-facing documents — the prospectus, the KID or KIID, marketing materials — describe the fund’s redemption mechanics, they must be reconciled with the embedded tools and updated where necessary. Telling investors one thing while your constitutional documents say another is an obvious supervisory risk.
Compliance checklist: what to have in place
10. Inventory every open-ended AIF and UCITS under management (and self-managed entities), and identify any money market funds eligible for the single-tool option.
11. For each fund, perform and document a suitability assessment of candidate LMTs against the investment strategy, liquidity profile and redemption policy — fund by fund, not as a generic exercise.
12. Select at least two appropriate tools from items (2) to (8), ensuring the selection is not limited to swing pricing and dual pricing alone.
13. Record board or senior-management approval of the LMT selection, with the date and the rationale, and retain the minutes.
14. Amend the fund rules, instruments of incorporation or partnership agreement to embed the selected tools and the conditions for their use.
15. File the relevant application or notification with CySEC — with the suitability confirmation and the applicable fee — under the provision matching each fund’s legal form (and jointly with the depositary for common-fund UCITS).
16. Reconcile investor-facing disclosures (prospectus, KID/KIID, marketing materials) with the embedded tools and update where necessary.
17. Confirm operational readiness: can you actually calibrate and activate each selected tool if circumstances require? If not, that readiness gap needs to be addressed.
18. Update the compliance monitoring plan and the liquidity-risk framework to reflect the selected tools, activation conditions and the rationale linking each tool to the fund’s strategy and redemption profile.
| Evidence to retain | Where |
| Fund-by-fund suitability assessment | Compliance file |
| Board/IC approval minutes | Board records |
| Amended fund rules / constitutional documents | Fund documentation file |
| CySEC filing confirmation and fee receipt | Regulatory correspondence file |
| Updated investor disclosures | Fund documentation file |
| Operational readiness note | Risk management records |
Frequently asked questions
Is CySEC C743 a new obligation or a clarification?
It is a new obligation. C743 implements the LMT requirements introduced by Directive (EU) 2024/927 into both the AIFMD and UCITS frameworks. Open-ended AIFs and UCITS must select at least two appropriate LMTs and embed them in their fund rules or instruments of incorporation.
The February 2026 filing deadline has passed. What now?
The filing obligation remains. If you have not yet submitted the application or notification, you should do so promptly and be in a position to evidence the suitability assessment, board approval and constitutional amendments. CySEC may follow up through its supervisory cycle.
How many liquidity management tools must a fund select?
At least two appropriate tools from items (2) to (8) of the harmonised list. The selection cannot consist only of swing pricing and dual pricing. A money market fund within the meaning of Regulation (EU) 2017/1131 may select a single tool from that range.
What must accompany the application or notification to CySEC?
A confirmation by the manager or self-managed entity that the LMT selection was made following a fund-by-fund suitability assessment, together with the applicable fee under the relevant CySEC fees directives.
What should we be able to evidence in response to supervisory review?
That you identified each in-scope fund, performed and documented a fund-by-fund suitability assessment, selected at least two appropriate tools, obtained and minuted board approval, amended the constitutional documents, filed with CySEC, reconciled investor disclosures, and updated your compliance monitoring and liquidity-risk framework.
Can suspension and side-pockets be used if not pre-included in fund rules?
Yes. These two tools (items (1) and (9)) may be activated in exceptional circumstances in investors’ interests even where they have not been specifically included in the fund’s constitutional documents.
How CX Financia helps
For managers of open-ended AIFs and UCITS, the priority is to demonstrate a structured exercise: which funds are in scope, how each tool was assessed and selected, who approved it, how the constitutional documents were amended, and that the CySEC filing has been made.
CX Financia supports firms through its Regulatory Compliance Services with targeted LMT suitability reviews, fund-documentation and governance updates, investor disclosure reconciliation, and compliance-monitoring enhancements; and, through its Licensing support, with the CySEC applications and notifications required to amend fund rules and instruments of incorporation.
Arrange a liquidity management tools readiness review with CX Financia.
Related reading
· Pillar / category: [Funds & Asset Management](#)
· Related article: [ESMA LMT Guidelines and CySEC C776: what fund managers should prepare](#)
· Related article: [AIFMD II / Directive (EU) 2024/927: a practical compliance roadmap](#)
· Related article: [Liquidity risk management for open-ended funds: governance and evidence](#)