January 28, 2022

Volume XII, Number 28

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ESAs Opinion on Jurisdictional Scope of the Securitisation Regulation

On March 26, the European Supervisory Authorities (ESAs) published an opinion to the European Commission on the jurisdictional scope of the Securitisation Regulation ((EU) 2017/2402).

In the Securitisation Regulation, the definition of “securitization” does not set out its jurisdictional scope and does not stop entities located in a third country (for example, the UK) from being party to a securitization. Securitizations with a third-country party can lead to difficulties when interpreting Articles 5 to 7 and 9 of the Securitisation Regulation and obstruct the effective functioning of the market. The following scenarios are specifically highlighted:

  • securitizations where some of the sell-side parties are located in a third country;

  • securitizations where all sell-side parties are located in a third country and EU investors invest in them;

  • investments in securitizations by subsidiaries of EU regulated groups, where those subsidiaries are located in a third country; and

  • securitizations where one of the parties is a third-country investment fund manager.

Hence, the ESAs’ view is the Commission should publish a statement to provide interpretative guidance on application points.

The opinion suggests:

  • the Commission should use the future review of the securitization framework to propose amendments to the Securitisation Regulation;

  • amending Article 14 of the Capital Requirements Regulation (575/2013) (CRR) to enable an EU parent undertaking to ring-fence a third-country subsidiary investing in a securitization from the EU group;

  • amendments to Article 42 of the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) to clarify how rules apply to non-EU AIFMs; and

  • amendments to drafting in the Securitisation Regulation to avoid conflicts with delegation regimes in the AIFMD and UCITS Directive (2009/65/EC).

ESA Opinion

©2022 Katten Muchin Rosenman LLPNational Law Review, Volume XI, Number 92
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About this Author

Carolyn H. Jackson, International Attorney, Katten Muchin law firm
Partner

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London
Partner

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

44-0-20-7776-7666
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