Simpler, more transparent and more standardised securitisation

 

SUMMARY OF:

Regulation (EU) 2017/2402 — general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation

WHAT IS THE AIM OF THE REGULATION?

It aims to restart a high quality securitisation* market that will:

It creates a general system to simplify rules for all securitisations and to identify simple, transparent and standardised securitisations. This includes:

KEY POINTS

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 1 January 2019.

BACKGROUND

KEY TERMS

Securitisation: a transaction that enables a lender — often a bank — to refinance a set of loans/assets (e.g. mortgages, car leases, consumer loans, credit cards) by converting them into securities that others can invest in.
Due diligence: an institutional investor should be able to show that the necessary verifications of the due-diligence requirements laid down in detail in Article 5 of the regulation have been met.
Risk-retention: planned acceptance of losses where some, but not all, risk is consciously retained rather than transferred.
Resecuritisation: securitisation where at least one of the underlying exposures is a securitisation position.
Securitisation special purpose entities: a body carrying out one or more securitisations and whose structure is intended to isolate the SSPE’s obligations from those involved in the original agreement.
Securitisation repositories: centrally collect and maintain records on securitisations to help improve transparency in the market.
Securitisation position: exposure to a securitisation.

MAIN DOCUMENT

Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347, 28.12.2017, pp. 35-80)

RELATED DOCUMENT

Regulation (EU) 2017/2401 of the European Parliament and of the Council of 12 December 2017 amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (OJ L 347, 28.12.2017, pp. 1-34)

last update 18.03.2019