Featured Product

    HM Treasury Issues Update on Review of Securitization Regulation

    December 13, 2021

    Her Majesty's (HM) Treasury published a report on responses to the call for evidence that was intended to inform the review of the Securitization Regulation in UK. Responses to the call for evidence were considered in the review, on which a report has been laid before UK Parliament ahead of a statutory deadline of January 01, 022. HM Treasury, working with the financial services regulators—the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)—will take forward the work on a number of areas within the Securitization Regulation to deliver the aims of the review.

    The overarching aims of the review of the Securitization Regulation are to bolster securitization standards in the UK and to support and develop securitization markets in the UK, including through the increased issuance of simple, transparent, and standardized (STS) securitizationsThe government had sought views on how the securitization market in UK is performing and how the Securitization Regulation can be tailored to the UK. The consolation consultation ran for 10 weeks, from June 24, 2021 to September 02, 2021. The report notes that it is challenging to definitively draw conclusions on the effect of the Securitization Regulation on the functioning of the UK securitization market. The Securitization Regulation has only applied in the UK since 2019. During this time, unique external factors, like the COVID-19 pandemic, have disrupted financial markets and made it difficult to assess the effects of the Securitization Regulation. Nevertheless, there are signs that the Securitization Regulation has increased the transparency and robustness of the UK securitization market, which were key aims of the Regulation. However, there are indications that the Securitization Regulation has not boosted securitization issuance or broadened the investor base as much as it could have. Overall, HM Treasury continues to support the Securitization Regulation, in particular noting the importance of preserving confidence in the STS framework. Although there are some areas of the Regulation that may benefit from targeted and appropriate refinement. HM Treasury and the financial services regulators will continue to monitor the market.

    The report outlines specific areas of the Securitization Regulation that HM Treasury considers may be usefully re-visited to ensure it best delivers for the UK securitization market. It notes the issues and suggestions related to disclosure requirements raised by respondents to the call for evidence. HM Treasury recognizes that work is needed on the disclosure requirements, especially to assess the distinction between different types of securitizations (that is, whether they are public or private) and to consider whether the disclosure requirements for certain private securitizations are appropriate. HM Treasury will also consider amending or clarifying some of the jurisdictional scope matters related to the Securitization Regulation that were raised. This includes scoping out certain unauthorized, non-UK Alternative Investment Fund Managers (AIFMs) from the Regulation’s definition of institutional investor and clarifying due diligence requirements for investors when they invest in non-UK securitizations. HM Treasury also agrees with respondents that an STS equivalence framework, under which future equivalence determinations could be made, should be introduced. Further areas. where HM Treasury, working with the regulators, will consider whether changes are appropriate include revisions to risk retention requirements and exploring expanding disclosure templates to require more information about a securitization's environmental, social, and governance impact.

    The report concludes that no changes are currently needed to the Securitization Regulation relating to Third Party Verifiers (TPVs) or Securitization Special Purpose Entities (SSPEs) because neither of these elements of the regime raised major concerns. Finally, the report covers the prudential treatment of securitization (that is, capital and liquidity requirements) within regulatory regimes for banks, building societies, and insurance firms. This is not directly in scope of the review because the requirements sit outside the Securitization Regulation. However, considering the high interest in this topic from respondents to the call for evidence, HM Treasury and PRA will consider certain points related to the prudential treatment of securitizations in due course.

     

    Related Links

    Keywords: Europe, UK, Banking, Insurance, Securities, Securitization Regulation, STS Securitization, Securitization, AIFMs, PRA, FCA, HM Treasury

    Related Articles
    News

    US Regulators Release Stress Test Scenarios for Banks

    The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

    February 28, 2024 WebPage Regulatory News
    News

    Asian Governments Aim for Interoperability in AI Governance Frameworks

    The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.

    February 28, 2024 WebPage Regulatory News
    News

    EBA Proposes Operational Risk Standards Under Final Basel III Package

    The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.

    February 26, 2024 WebPage Regulatory News
    News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News
    News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News
    News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News
    News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News
    News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News
    News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News
    News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8952