Roller-coaster ride for the securitisation market

Roller-coaster ride for the securitisation market

Robert Cannon, a special counsel in the capital markets team at Cadwalader, Wickersham & Taft LLP, considers the EU securitisation regulation adopted by the European Parliament on 26 October 2017 and the impact it will have on the European securitisation market.

Original news

The European Parliament has approved new rules to create a European framework for simple, transparent and standardised (STS) securitisations, as well as new rules on preferential capital treatment for STS securitisations. The rules are aimed at reviving securitisations in the EU, which declined after the US sub-prime crisis in 2008.

What is the background to the European Parliament vote?

In September 2015, the European Commission proposed a regulation to lay down common rules on securitisation and to create a European framework for STS securitisation (the Regulation). In December 2015, the Council of Ministers, made up of representatives of the 28 EU Member States, adopted an agreed text on the Regulation with some relatively minor amendments to that proposed by the Commission. After lengthy deliberations throughout 2016, the European Parliament proposed significant amendments to the text proposed by the Commission.

During the first half of 2017 there were a series of trilogue meetings among representatives of the European Commission, the Council of Ministers and the European Parliament to reach an agreed position on the Regulation. In June 2017, these representatives reached political agreement on a text of the Regulation which was published. Following some minor revisions to tidy up the politically-agreed text and to address some concerns in relation to the rules on credit-granting, a revised text was published and adopted by the European Parliament.

When will the Regulation apply and what are the next steps?

The Regulation provides that it is to apply from 1 January 2019. The next step is for the Council of Ministers to adopt the same version of the Regulation as adopted by

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About the author:

Meet Emma:

1.Banking and finance lawyer with experience in derivatives, debt capital markets, securitisation and structured finance in London and Paris

2.Likes ballet, playing the harp and holidays

3.Thinks the law is always changing!

Emma trained and qualified at Allen & Overy LLP and worked in their derivatives and structured finance teams in London and Paris.  She then joined the foreign exchange prime brokerage legal team at Deutsche Bank before spending 4 ½ years with Crédit Agricole CIB advising the fixed income and derivatives desk.