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).