On 28 November 2023, a draft statutory instrument (SI) – the Securitisation Regulations 2023 – was published on legislation.gov.uk, along with an explanatory memorandum. The draft SI, which is part of HM Treasury’s programme to deliver a Smarter Regulatory Framework for financial services, establishes a new legislative framework for the regulation of certain activities related to securitisation.

An illustrative version of the draft SI was published in December 2022 as part of the Edinburgh Reforms, to show how the powers introduced in the Financial Services and Markets Act 2023 would be used to tailor the regulation of securitisation to the UK.  A near-final version was subsequently published in July 2023 for technical comments, alongside an explanatory policy note – see our blog.

The draft SI creates a new framework within which the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) can make rules in relation to securitisation. It includes powers (amongst others) for the FCA to make rules (both for authorised and unauthorised firms) in relation to the designated activities specified in Regulation 4 of the draft SI.

The draft SI is intended to come fully into force alongside new FCA and PRA rules and the commencement of the repeal of retained EU law in relation to securitisation.

In the explanatory memorandum, HM Treasury notes that the outcomes of the FCA’s and PRA’s separate consultations on the rules they intend to make in relation to securitisation (including rules made using the powers granted to them in the draft SI) are expected to be published by Q2 2024.