New EU Securitisation Regulation: Impact for UCITS and AIFs

On 17 January 2018 the new Securitisation Regulation (Regulation EU 2017/2402) (the “Securitisation Regulation”) came into force and will apply from 1 January 2019. The Securitisation Regulation represents a long awaited reform of the EU securitisation rules which will replace the existing patchwork of sector-specific legislation governing European securitisations with harmonised rules on due diligence, risk retention and disclosure applying to all securitisations and introduces the rules for issuing simple, transparent and standardised (“STS”) transactions.

Significantly, UCITS will be within the scope of the Securitisation Regulation. This briefing highlights key points for managers of UCITS and AIFs to consider in terms of the impact the new rules will have on their existing portfolios and investment strategies going forward.

 

1. What is a Securitisation?
The definition of “securitisation” (broadly speaking, a transaction or scheme, whereby credit risk is tranched) used in the Capital Requirements Regulation (“CRR”) and cross-referred to in the Alternative Investment Fund Managers Directive (“AIFMD”) has been replicated in the Securitisation Regulation with the addition of a new limb exempting transactions which create “specialised lending exposures” in accordance with Article 147(8) of the CRR, being exposures towards an entity specifically created to finance or operate physical assets...

 

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