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• repealed the main securitisation provisions in sectoral legislation applicable to banks (the Capital Requirements Regulation, or "CRR"), insurers (Solvency II) and fund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;
• 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; and
• applies to securitisations which are issued on or after 1 January 2019 and to any securitisation in which a new securitisation position is created on or after 1 January 2019, subject to certain transitional arrangements. Existing securitisations will, generally, continue to be subject to the previous rules, unless new securities are issued or a new position is created in that securitisation transaction.
   

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.

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