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European Commission consults on EU securitisation framework

The European Commission has launched a consultation on the EU securitisation framework. The consultation covers the following issues:

  • the effects of the EU Securitisation Regulation;
  • private securitisations;
  • due diligence;
  • jurisdictional scope;
  • equivalence in respect of simple, transparent and standardised (STS) securitisations;
  • disclosure of information on environmental performance and sustainability;
  • the need for establishing a system of limited-licensed banks to perform the functions of securitisation special purpose entities;
  • supervision;
  • assessment of non-neutrality correction factors impact;
  • maturity;
  • treatment of STS securitisations and asset-backed commercial papers for the liquidity coverage ratio;
  • significant risk transfer (SRT) tests;
  • the SRT assessment process;
  • amendments to the Capital Requirements Regulation; and
  • Solvency II.

The consultation will close on 17 September 2021.

This closely follows the launching, by HM Treasury, of a consultation which covers some of these issues in respect of the UK Securitisation Regulation (such as the effects of the securitisation regime; private securitisations; STS equivalence; environmental, social and governance disclosures; and the use of limited-licensed banks). Separately, the European Banking Authority has recently commenced a consultation on risk retention.

Please speak to your usual Macfarlanes contact if you have any questions.

When soundly structured, securitisation can play a positive role in deepening capital markets and freeing up bank balance sheets. In particular, by transforming illiquid assets into tradable securities, securitisation can release bank capital for further lending.

Tags

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

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