Securitisation Regulation adopted by European Parliament

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On October 26, 2017 the European Parliament voted on and approved the new Securitisation Regulation (SR) and Securitisation Prudential Regulation (SPR).

Six things you need to know:

  • The SR introduces long awaited rules for issuing simple, transparent and standardised (STS) securitisations.
  • The SPR sets out the framework under which banks and investment firms might benefit from favourable capital treatment for STS securitisations.
  • While the final texts follow broadly what was agreed politically in June 2017, there is a new carve-out to the proposed ban on securitisation of “self-certified” mortgage loans.
  • Next steps include adoption by the European Council and publishing in the Official Journal of the EU - the SR and SPR will enter into force on the twentieth day after being published.
  • Most provisions will apply on January 1, 2019 and securitisations outstanding before that date will be grandfathered.
  • In the meantime, the European Supervisory Authorities will develop technical standards to provide details on how the legislation will be implemented.

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