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.