{"id":17884,"date":"2022-09-18T16:16:18","date_gmt":"2022-09-18T16:16:18","guid":{"rendered":"http:\/\/legalblog.ie\/?p=17884"},"modified":"2022-09-25T13:55:19","modified_gmt":"2022-09-25T13:55:19","slug":"securitisation","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/securitisation\/","title":{"rendered":"Securitisation [EU]"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/securitisation\/#Simpler_more_transparent_and_more_standardised_securitisation\" title=\"Simpler, more transparent and more standardised securitisation\">Simpler, more transparent and more standardised securitisation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/securitisation\/#Key_Points\" title=\"Key Points\">Key Points<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/securitisation\/#Application_Background\" title=\"Application &amp; Background\">Application &amp; Background<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/securitisation\/#MAIN_DOCUMENT\" title=\"MAIN DOCUMENT\">MAIN DOCUMENT<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Simpler_more_transparent_and_more_standardised_securitisation\"><\/span>Simpler, more transparent and more standardised securitisation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Regulation (EU) 2017\/2402 \u2014 general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation<\/p>\n<p>It aims to restart a high quality securitisation* market that will:<\/p>\n<p>improve the financing of the EU\u2019s real economy;<br \/>\nenhance private risk sharing; and<br \/>\nensure investor protection.<\/p>\n<p>It creates a general system to simplify rules for all securitisations and to identify simple, transparent and standardised securitisations. This includes:<\/p>\n<p>common definitions for all key concepts in a securitisation;<br \/>\nrequirements for due diligence*, risk-retention*, transparency and credit-granting criteria;<br \/>\nrequirements for the sale of securitisations to retail clients;<br \/>\na ban on resecuritisation*;<br \/>\nrules for securitisation special purpose entities* (SSPEs) and securitisation repositories*;<br \/>\na structure for simple, transparent and standardised (STS) securitisation;<br \/>\na system for administrative sanctions and remedial measures in cases of non-compliance.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Key_Points\"><\/span>Key Points<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Investors in a securitisation position* must first carry out certain tests to:<br \/>\nassess all the risks involved before taking on the responsibility (due diligence);<br \/>\nensure the product is suitable for the client before selling it on.<\/p>\n<p>Issuers of a securitisation must:<br \/>\nretain a net economic interest of at least 5% of its value (risk-retention);<br \/>\nprovide detailed information and underlying documents to holders of a securitisation position, the relevant authorities and, if asked, potential investors so they understand the transaction (transparency);<br \/>\napply the same sound and well-defined criteria for granting credit as they do for non-securitised products.<\/p>\n<p>Securitisation special purpose entities must not be based in a high-risk non-EU country.<\/p>\n<p>Securitisation repositories must:<br \/>\nregister with the European Securities and Markets Authority which has powers to withdraw their licence;<br \/>\ncollect and keep all details of the securitisation and make these available free of charge to investors and competent authorities.<\/p>\n<p>Issuers may use the term STS (simple, transparent and standardised) when the securitisation, whether short- or long-term, meets a clear set of criteria. This is to distinguish it from more complex and opaque ones and enables some institutional investors to apply a more risk-sensitive capital treatment.<\/p>\n<p>Various European and national authorities, with powers to investigate and apply administrative and criminal penalties, supervise implementation of the legislation and work closely together.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Application_Background\"><\/span>Application &amp; Background<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>By 1 January 2021, and then every 3 years, the Joint Committee of the European Supervisory Authorities publishes a report on experiences with the regulation.<\/p>\n<p>The European Commission:<br \/>\nby 2 January 2020, on the basis of a report published by the European Banking Authority, presents a report to the European Parliament and the Council on the feasibility of creating an STS framework for synthetic securitisations;<br \/>\nby 1 January 2022, presents a report to the European Parliament and the Council on the legislation with proposals for amendments if necessary;<br \/>\nhas the power to adopt delegated acts to amend non-essential elements of the regulation.<br \/>\nIt has applied since 1 January 2019.<\/p>\n<p>Securitisation products played a significant role in the US subprime mortgage crisis beginning in 2007. The market in the EU has been slow to recover since.<br \/>\nThe legislation, which also amends the capital requirements regulation (Regulation (EU) 2017\/2401), is designed to remedy this by introducing clear and effective rules to restore market confidence.<br \/>\nA framework for securitisation is the first major building block of the EU\u2019s plan, launched in 2015, to develop a fully functioning capital markets union by the end of 2019. Developing a securitisation market helps create new investment possibilities and provide an additional source of finance, especially for small- and medium-sized enterprises and start-ups.<\/p>\n<p>For more information, see:<br \/>\nSecuritisation (European Commission)<br \/>\nA European framework for simple and transparent securitisation \u2014 Fact sheet (European Commission).<\/p>\n<p>KEY TERMS<\/p>\n<p>Securitisation: a transaction that enables a lender \u2014 often a bank \u2014 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.<br \/>\nDue 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.<br \/>\nRisk-retention: planned acceptance of losses where some, but not all, risk is consciously retained rather than transferred.<br \/>\nResecuritisation: securitisation where at least one of the underlying exposures is a securitisation position.<br \/>\nSecuritisation special purpose entities: a body carrying out one or more securitisations and whose structure is intended to isolate the SSPE\u2019s obligations from those involved in the original agreement.<br \/>\nSecuritisation repositories: centrally collect and maintain records on securitisations to help improve transparency in the market.<br \/>\nSecuritisation position: exposure to a securitisation.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"MAIN_DOCUMENT\"><\/span>MAIN DOCUMENT<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>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)<\/p>\n<p>RELATED DOCUMENT<\/p>\n<p>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)<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-17884\" data-postid=\"17884\" class=\"themify_builder_content themify_builder_content-17884 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Simpler, more transparent and more standardised securitisation Regulation (EU) 2017\/2402 \u2014 general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation It aims to restart a high quality securitisation* market that will: improve the financing of the EU\u2019s real economy; enhance private risk sharing; and ensure investor protection. It creates [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[128,49],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/17884"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=17884"}],"version-history":[{"count":2,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/17884\/revisions"}],"predecessor-version":[{"id":18336,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/17884\/revisions\/18336"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=17884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=17884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=17884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}