On 1 January 2019 the EU Securitisation Regulation (the "Regulation" or "Securitisation Regulation") began to apply. The new Securitisation Regulation:

• repealed the main securitisation provisions in sectoral legislation applicable to banks (the Capital Requirements Regulation, or "CRR"), insurers (Solvency II) and fund managers (the Alternative Investment Fund Managers Directive regime) and recast those provisions in a new, harmonised securitisation regime applicable to all institutional investors including UCITS and pension funds;
• as part of that harmonisation, makes risk retention and disclosure obligation applicable directly to sell side entities such as issuers (SSPEs), originators, sponsors and original lenders; and
• introduces a concept of "simple, transparent and standardised" (or "STS") securitisation into EU law and gives STS securitisations more favourable regulatory treatment compared to non-STS securitisations.

In addition to these high-level changes, the Securitisation Regulation legislative package introduced a number of other significant changes. These include a ban on resecuritisation, a ban on securitising self-certified residential mortgage loans originated after 21 March 2014 and formal restrictions on marketing securitisations to retail investors. It also introduces a much more punitive sanctions regime for non-compliance by originators, sponsors, original lenders and SSPEs than previously existed. Sanctions for non-compliance by institutional investors continue to be provided for under the sectoral prudential regimes applicable to them.

What's next?

EU: The European Commission is required to present a report on the implementation of the EU Securitisation Regulation (accompanied, if appropriate, by a legislative proposal) to the European Parliament and the Council by 1 January 2022. The European Commission launched a consultation in July 2021, which closed in September 2021. The report has not been published in time for the 1 January 2022 deadline but is expected to be published shortly. See our client briefings The Future of the EU Securitisation Regulation (June 2021) and Structured debt in a new world (March 2022) for more information.

UK: HM Treasury published a report on its review of the UK Securitisation Regulation in December 2021. This followed a call for evidence launched in June 2021 and a statutory obligation under Article 46 of the Securitisation Regulation for HM Treasury to review the functioning of the Regulation and to lay a report before the UK Parliament by 1 January 2022.

Key Legislation

Regulation (EU) 2017/2402 on the Securitisation Regulation  (28 December 2017)

Regulation (EU) 2017/2401 on the CRR Amending Regulation  (28 December 2017)

NB see the 'UK Securitisation Regulation: legislation and official documentation' section below for legislation setting out the UK securitisation regime as it applies after Brexit