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Last verified 2026-07-13

RTS, ITS and guidance — Level 1 vs Level 2 vs Level 3 EU fund rulemaking

EU fund rules come in three layers. Level 1 is the directive or regulation — the obligations in principle. Level 2 is the RTS and ITS (regulatory and implementing technical standards): binding detail rules ESMA drafts and the Commission adopts, applying directly in every member state. Level 3 is guidance — ESMA guidelines and national-regulator circulars: "comply-or-explain" expectations, not black-letter law. All three bind your operations in practice, but only Levels 1 and 2 are law you can be sued on; Level 3 is the supervisor's stated expectation, which you follow or publicly justify not following.

The legal machinery lives in the ESMA Regulation (Regulation (EU) 1095/2010): RTS under Articles 10–14, adopted as Commission delegated regulations; ITS under Article 15, adopted as Commission implementing regulations. The working distinction: RTS say what the detailed rule is (calculation methods, characteristics, conditions); ITS say how to comply mechanically (forms, templates, reporting procedures). The classic Level 2 example is Delegated Regulation (EU) 231/2013 — where most of AIFMD's operational content (AuM calculation, leverage, Annex IV) actually lives.

Level 3 — guidance. Beneath the binding layers sits guidance: pan-EU ESMA guidelines (issued under Article 16 of the ESMA Regulation) and, at national level, regulator circulars — the CSSF in Luxembourg, the FCA in the UK, the JFSC and GFSC in the Channel Islands. These are comply-or-explain: a national competent authority must tell ESMA whether it complies with a guideline, and a firm that departs from it should be able to justify the departure. It reads like an obligation and supervisors enforce it like one, but it is not the directive — so the source matters. When you rely on ESMA's liquidity-stress-testing guidelines or a point in CSSF Circular 18/698, cite it as guidance, not as AIFMD itself.

The practical gotcha: Level 1 and Level 2 run on different calendars. "AIFMD II applies from 16 April 2026" is a Level 1 truth — but the liquidity-tool RTS were only adopted in November 2025, the open-ended loan-origination RTS are still awaiting adoption, and the rewritten reporting standards land in 2027. Compliance dates are set by the Level 2 pipeline, so track both layers — a Level 1 date with no adopted RTS behind it is a deadline you can't yet build to. And when you search the law on this site, each result is tagged by tier — (law), (Level 2) or (guidance) — so you always know which layer you're standing on.

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