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Securitisation – EBA consults on risk retention and HMT consults on the UK Sec Reg

EBA consults on risk retention

The European Banking Authority (EBA) has launched a consultation on draft regulatory technical standards (the Draft RTS), pursuant to article 6(7) of the EU Securitisation Regulation, specifying the requirements for originators, sponsors, original lenders and servicers relating to risk retention.

The Draft RTS carry over a substantial amount of provisions from the EBA RTS on risk retention submitted to the European Commission in July 2018; however, the EBA has also included a number changes, including: 

  • specifying modalities of risk retention in traditional non-performing exposure (NPE) securitisations and specifying requirements for the expertise of servicers acting as a retainers in such NPE securitisations;
  • providing clarification on the treatment of synthetic excess spread;
  • developing provisions on the impact, on risk retention, of fees payable to the retainer;
  • the inclusion of provisions on securitisations of own liabilities; 
  • giving further clarity on risk retention in resecuritisations; and 
  • developing provisions in respect of asset “cherry picking”.

The consultation runs until 30 September 2021.

HMT consults on the UK Sec Reg

HM Treasury (HMT) has launched a consultation on the UK Securitisation Regulation, on which a report will be laid before Parliament by 1 January 2022.

The overarching aims of the consultation are to:

  • bolster securitisation standards in the UK, in order to enhance investor protection and promote market transparency; and 
  • support and develop securitisation markets in the UK, including through the increased issuance of “simple, transparent and standardised” securitisations, in order to ultimately increase their contribution to the real economy.

HMT seeks views on how the UK’s securitisation market is performing and how the UK Securitisation Regulation can be tailored to the UK.

The consultation runs until 2 September 2021.

Well-structured and robust securitisation can support economic recoveries. [...] It will be vitally important that lenders continue to provide significant support to the real economy, and securitisation can help them do this.

Tags

derivatives and trading, securitisation, finance, structured finance, financial services, alternative afm

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