Holding ABS is still tricky: the EU securitisation regulation and its UK equivalent: This article was correct at the time it was written in October 2020.
Journal of Investment Compliance
ISSN: 1528-5812
Article publication date: 8 April 2021
Issue publication date: 11 May 2021
Abstract
Purpose
To highlight that the risk retention rules associated with the holding of securitization investments, commonly thought to apply only to the sponsors and manufacturers of securitisations, also affect EU institutional investors and potentially impact non-EU fund managers that invest in these assets.
Design/methodology/approach
To address which classes of investor are affected and then to provide an overview of the obligations on affected investors that do invest in securitization investments.
Findings
There is much that is straightforward about the relevant obligations but there are a number of quirks that have not necessarily been fully appreciated by the market: these include the applicability to investors on a “look through” basis that may, inter alia, affect US credit fund managers with EU institutional investors.
Practical implications
EU institutional investors that do invest in this asset class should be considering the need to take practical steps to prepare written due diligence materials; non-EU credit managers that run e.g. ABS funds offered into the EU or in which there may be EU institutional investors should consider if they may have any obligations under the EU Securitization Regulation.
Originality/value
The aspects of the Securitization Regulation that affect institutional investors and regular fund managers have not been addressed as thoroughly as they have by the main securitization sector (banks, CLO managers and similar). This article seeks to remedy that and should prove of value to compliance, legal and other professionals at those types of institution.
Keywords
Citation
Parker, C., Srivastava, A., Severs, P. and Saylor, C. (2021), "Holding ABS is still tricky: the EU securitisation regulation and its UK equivalent: This article was correct at the time it was written in October 2020.", Journal of Investment Compliance, Vol. 22 No. 1, pp. 34-39. https://doi.org/10.1108/JOIC-10-2020-0030
Publisher
:Emerald Publishing Limited
Copyright © 2021, Paul Hastings LLP, London.