EU Legislators Agree On Amendments To Securitization And Capital Requirements Regulations

European Union legislative institutions agreed to various compromises in the form of amendments to proposed legislation concerning the European securitization framework. The institutions also agreed to proposed amendments to the Capital Requirements Regulation.

In a series of "trilogues," legislators met to negotiate the terms of proposed amendments. As Cadwalader attorneys explained in a recent memorandum addressing the negotiations, legislators agreed to the following key compromises:

• minimum requirements will remain at 5% for all modes of risk retention;
• the European Systemic Risk Board will monitor risk levels in the securitization market;
• the "sole purpose test" will be adopted to determine whether an entity is considered an originator;