Search results for: "securitisation (amendment)"

On 22 November 2024, the Securitisation (Amendment) (No. 2) Regulations 2024 came into force and were published on legislation.gov.uk, along with an explanatory memorandum.

The 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, and the Regulations extend 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.

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.

On 22 May 2024, the Securitisation (Amendment) Regulations 2024 were made.

The explanatory memorandum published alongside the Regulations explains that they make amendments to the UK’s securitisation regime, as part of HM Treasury’s programme to deliver a Smarter Regulatory Framework for financial services. The Securitisation Regulations 2024 establish the new legislative framework under which financial services regulators will make rules on general requirements for securitisation that apply to firms. The Regulations make textual amendments to the Securitisation Regulations 2024, so that the resulting law will be contained in a single statutory instrument. For more information, see our previous blog.

Most provisions of the Regulations will come into force on 1 November 2024.

On 22 April 2024, a draft statutory instrument, the Securitisation (Amendment) Regulations 2024 (the draft SI), which makes amends to the Securitisation Regulations 2024, was published alongside a draft Explanatory Memorandum. 

The draft SI forms part of HM Treasury’s programme to deliver a Smarter Regulatory Framework for financial services. The Securitisation Regulations 2024 establish the new legislative framework under which financial services regulators will make rules on general requirements for securitisation that apply to firms. The draft SI makes textual amendments to the Securitisation Regulations 2024, so that the resulting law will be contained in a single set of Regulations.

The draft SI:

  • Restates due diligence requirements for Occupational Pension Schemes, currently dealt with by the Securitisation Regulation. This is because The Pensions Regulator (which supervises Occupational Pension Schemes) does not have statutory rule-making powers, unlike the financial services regulators. Therefore, provisions relating to Occupational Pension Schemes are restated and set out in the draft SI.
  • Restates the prohibition on the establishment of Securitisation Special Purpose Entities in high-risk jurisdictions, with a modification to specify its application to institutional investors, as well as originators or sponsors.
  • Contains a range of consequential amendments of other enactments, resulting from the Securitisation Regulations 2024 or the revocation of the Securitisation Regulation.

Most provisions of the draft SI are due to come into force on 1 November 2024.

On 26 March 2019, the Securitisation (Amendment) (EU Exit) Regulations 2019 were made and published on legislation.gov.uk, together with an explanatory memorandum. Our earlier blog addressing the content of these Regulations is here.

You can track the financial services Brexit EU Exit statutory instruments (as well as gain access to our Brexit resources) on our Brexit Pathfinder hub. Registration is free via the NRF Institute portal. Conformed copies of the EU Exit statutory instruments are available exclusively through our PathfinderPLUS service. To gain access to PathfinderPLUS, please contact Jochen Vester or Simon Lovegrove.

On 11 March 2019, the FCA published Consultation Paper 19/11: Handbook changes to reflect the application of the Securitisation (Amendment) (EU Exit) Regulations 2019 and Securitisation Regulations 2018 (CP19/11).

In CP19/11 the FCA consults on changes to the Decision Procedure and Penalties manual (DEPP) and the Enforcement Guide (EG) that reflect its new responsibilities over securitisation repositories (SRs). In particular, the FCA propose a decision-making procedure for registering or withdrawing the registration of SRs. The FCA is also consulting on minor amendments to DEPP and EG resulting from new enforcement powers granted to it under the Securitisation Regulations 2018 (2018 Regulations).  The FCA proposes decision-making procedures for:

  • imposing a suspension, condition or limitation on an individual for a breach of a requirement imposed by or under the 2018 Regulations; and
  • imposing a suspension, limitation or other restrictions on an authorised person for a breach of a requirement imposed by or under the 2018 Regulations.

The deadline for comments on CP19/11 is 8 April 2019.

On 23 January 2019, there was published on legislation.gov.uk a draft of The Securitisation (Amendment) (EU Exit) Regulations 2019, together with an explanatory memorandum. The draft statutory instrument was first published on 19 December 2018 (our blog is here) and have now been laid before Parliament.

You can track the financial services Brexit EU Exit statutory instruments (as well as gain access to our Brexit resources) on our Brexit Pathfinder hub. Registration is free via the NRF Institute portal. Conformed copies of the EU Exit statutory instruments are available exclusively through our PathfinderPLUS service. To gain access to PathfinderPLUS, please contact Jochen Vester or Simon Lovegrove.

On 19 December 2018, HM Treasury published a draft of The Securitisation (Amendment) (EU Exit) Regulations 2019 together with explanatory information.

The draft statutory instrument remedies deficiencies within the EU Securitisation Regulation to ensure that the underlying policy framework remains in place upon the UK’s withdrawal from the EU. The Securitisation Regulation came into force in the EU in January 2018 and will take effect from January 2019. Key deficiencies remedied by the draft statutory instrument relate to simple, transparent and standardised (STS) securitisations. The draft statutory instrument allows for the possibility of cross-border securitisations post-exit and seeks to avoid a cliff-edge impact where EU STS securitisations cease to be recognised from exit day. This would be achieved in two steps:

  • securitisations recognised as STS in the EU before exit, and added during a subsequent two-year transition period, will continue to be recognised as STS in the UK; and
  • in the long term, specifically for asset-backed commercial paper (ABCP) cross-border securitisations, these will be eligible for STS recognition in the UK where the sponsor is located in the UK, even where the originator is located outside the UK. For non-ABCP cross-border securitisations, these would still be eligible for UK STS recognition where the sponsor and originator are located in the UK.

In addition to the amendments concerning STS securitisations, the draft statutory instrument makes a number of amendments to replace references to EU bodies (and their corresponding functions) to UK bodies, to reflect the UK’s position outside the EU.

You can track the financial services Brexit EU Exit statutory instruments (as well as gain access to our Brexit resources) on our Brexit Pathfinder hub. Registration is free via the NRF Institute portal. Conformed copies of the EU Exit statutory instruments are available exclusively through our PathfinderPLUS service. To gain access to PathfinderPLUS, please contact the financial services team.

On 1 November 2024, the Financial Conduct Authority (FCA) issued Handbook Notice 123.

This Handbook Notice sets out the instruments that the FCA Board approved on 29 and 31 October 2024.

The instruments that were approved are:

  • Technical Standards (Bilateral Margining) (Amendment) Instrument 2024. In summary, this instrument makes consequential amendments to Binding Technical Standards (BTS) 2016/2251 to reflect the expected changes to Article 4 and 11 of UK EMIR made in the Securitisation (Amendment) Regulations 2024.
  • Technical Standards (Credit Rating Agencies Regulation) (Amendment) Instrument 2024. In summary, this instrument makes a consequential amendment to the UK on-shored version of BTS 2015/2, the regulatory technical standards for the presentation of the information that credit rating agencies make available to the FCA.
  • Handbook Administration (No 71) Instrument 2024. In summary, the amendments correct an error in SUP 16 Annex 48AR and DISP App 4.4.2R to provide clarity.

On 31 October 2024, the Prudential Regulation Authority (PRA) published a policy statement, PS17/24, setting out its responses to occasional consultation paper CP6/24 and its final policy on the areas covered. PS17/24 also includes the PRA and Financial Conduct Authority (FCA)’s joint response and policy statement (FCA PS24/13) on finalised changes to the UK EMIR bilateral margin requirements, which were also consulted on in CP6/24.

Background

In CP6/24, the PRA proposed to make minor amendments to PRA rules and to add a new rule to the Policyholder Protection Part of the PRA Rulebook.

The PRA and FCA also proposed to make consequential amendments to Binding Technical Standards (BTS) 2016/2251, to reflect the expected changes to Articles 4 and 11 of UK EMIR that will be made in the draft Securitisation (Amendment) Regulations 2024.

Final policy

In PRA PS17/24 and FCA PS24/13, the regulators confirm that they are making the changes consulted on, with some amendments to certain aspects of the proposals to reflect feedback received from respondents.

Next steps

The changes set out in PS17/24 and PS24/13 will be implemented on:

  • 1 November 2024 for the amendments to BTS2016/2251.
  • 4 November 2024 for the PRA rules covered by PS17/24.