On 7 October 2024, the draft Securitisation (Amendment) (No. 2) Regulations 2024 (the draft Regulations) were published on legislation.gov.uk, along with a draft explanatory memorandum.
The draft Regulations extend a temporary arrangement granting preferential prudential treatment for EU-origin Simple, Transparent, and Standardised (STS) securitisations. UK investors, where they are subject to prudential regulation, currently access lower capital requirements when investing in EU STS securitisations. This instrument extends the time by which such EU STS securitisations can enter the temporary arrangement, from its expiry date on 31 December 2024, to 30 June 2026.
By making this change, the Government is aiming to provide continuity and certainty to investors, until a non-time-limited assessment is undertaken. The draft explanatory memorandum notes that without the change made by the draft Regulations, UK investors will face uncertainty and no longer qualify for preferential prudential treatment when investing in new EU-origin STS securitisations that have not accessed the temporary arrangement by 31 December 2024.