EU Securitisation Regulation Heralds Simple, Transparent And Standardised Securitisation

In a move that has been much anticipated by the finance market, the EU Commission published on 30 September 2015 a proposed Securitisation Regulation.  The Proposed Regulation should be seen in the context of the EU Commission's plan to boost funding and growth across Europe by creating a Capital Markets Union, of which a recovery in the securitisation markets is acknowledged to be a key contributor. 

The proposed Regulation is welcome since it will consolidate and replace provisions spread across several other regulations and, in doing so, will remove many of the inconsistencies which have caused headaches to market participants.  In addition to consolidating existing provisions, the proposed Regulation will break new ground by taking a direct approach to the regulation of risk retention, requiring originators, sponsors and original lenders to retain the familiar 5% net economic interest, a marked movement away from the existing regulations which impose obligations