Liquidity management tools (Swing Pricing and Anti-Dilution Levies)


The AMF, the French Financial Market Authority expressed its support in 2022 for the generalisation of the three liquidity management tools: Gates, Swing Pricing and Anti-Dilution Levies (ADL). On 24 November 2022, the AMF, following October’s update of its DOC-2017-05 policy on Gates, published another update on the introduction of Swing Pricing or ADL mechanisms.

These modifications provide for new requirements if the regulatory documentation of a collective investment undertakings (UCIs) does not include a mechanism to cap redemption requests (Gates) and/or a mechanism to offset or reduce the costs of portfolio reorganisation borne by all holders during subscriptions and redemptions (swing pricing or ADL).

These new obligations are applicable immediately for new UCIs and must be complied with by 31 December 2023 at the latest for existing UCIs, if these new or existing UCIs do not include such mechanisms in their regulatory documentation. It concerns the following funds domiciled in France: UCITS1, FIVG, FCPR, FCPI, FIP, FES, FFA, FPVG, FPCI, FPS, SLP, OPCI, OPPCI and OFS. In view of their particularities, these requirements do not apply to listed index funds (ETFs), AIFs closed to redemptions, dedicated AIFs and money market funds (MMFs).

What are the principles of Swing Pricing mechanisms and ADL?

To make the holder (incoming or outgoing), bear the cost of the portfolio adjustment necessary to manage the inflows or outflows, the management company has two mechanisms: swing pricing and ADL.

Swing pricing is the mechanism by which the net asset value of a fund is adjusted upwards (in case of net subscription) or downwards (in case of net redemption). The adjustment for incoming or outgoing investors therefore does not take the form of a commission. The mechanism must be provided for in the fund’s prospectus and be subject to governance within the portfolio management company:

For the determination of the application thresholds: level of subscription or redemption from which a Swing is applied to the valuation;

Swing factors: level of variation applied to valuation. The factor depends on the average liquidity of the securities held by the fund and the various costs of disposal or acquisition of these securities.


  • Total net assets of the fund: EUR 100 million

  • Threshold rate: 1%

  • Subscriptions: 11 M EUR

  • Redemptions: 9 M EUR
    The difference between subscriptions and redemptions (EUR 2 million) is greater than the threshold (1% of EUR 100 million, i.e., EUR 1 million). As a result, the net asset value (NAV) of the fund is adjusted upwards using the purchase adjustment rate. All incoming and outgoing holders will contribute.

In the case of adjustable rights (ADL), it is the variable fees acquired from the fund which are applied in addition to the subscription or redemption transaction that vary and not the net asset value. The economic result is similar with one main difference: this tool has no impact on the valuation of the fund’s units but requires the application of potentially different variable costs from one day to the next by the actors involved in the transmission of the order such as the account holders or centralisers.


  • Total net assets of the fund: EUR 100 million

  • Cost estimate rate: 5% of NAV

  • Subscriptions: 11 M EUR

  • Redemptions: 9 M EUR

The net asset adjustment cost is the difference between subscriptions and redemptions (EUR 2 million) multiplied by the cost estimate rate (5%). So, in this example, outgoing holders benefit from a higher redemption value and incoming holders bear 5% of the fees on subscriptions. The commissions received minus the commissions paid correspond to the costs incurred by the fund and there is no impact on the fund.

New measures linked to the introduction or not of these mechanisms in the funds

Until now, the AMF doctrine has not governed the use by management companies of Swing Pricing mechanisms or ADL in their UCIs. It only dealt with the conditions under which information of holders or shareholders is required in the event of the introduction or modification of these tools. To better regulate their recourse by management companies, the AMF has completed instruction DOC-2017-05 by adding new provisions relating to the introduction of the Swing Pricing mechanism or the ADL in the UCIs concerned.

Christian de Beaufort, Market Infrastructures & Regulation, Societe Generale Securities Services



  • ETF: Exchange Traded Fund

  • FPCI: innovation mutual fund

  • FCPR: venture mutual fund

  • FES: employee savings fund

  • FFA: alternative fund of funds

  • FIP: local investment fund

  • FIVG: general purpose investment fund

  • FPCI: professional private equity fund

  • SPF: specialized professional fund

  • VGF: general purpose professional funds

  • MMF: money market fund

  • OFS: joint and several land organisation

  • UCI: collective investment fund

  • OPCI: real estate collective investment fund

  • UCITS: undertakings for collective investment in transferable securities

  • OPPCI: real estate collective investment fund

  • SLP: free partnership society

1Please refer to the glossary at the end of this article

Read our Regulatory Overview.