ECON Agrees Compromise Amendments To STS/Risk Retention

Introduction

The European Parliament's Committee on Economic and Monetary Affairs ("ECON") has today agreed compromise amendments (the "Compromise Amendments") to the proposed EU regulation intended to lay down common rules on securitisation and create a European framework for "simple, transparent and standardised" ("STS") securitisation (the "Regulation")¹.

Overview

Some of the main proposals have already been flagged in previous drafts of ECON's amendments, but many have been subject to further change. Notably, there are proposals to increase the minimum retention level for most forms of risk retention, with the possibility of further increases in due course of up to an overall cap of 20 per cent. There are also important restrictions on the identity of the participants in the securitisation market, with investors being limited to specified regulated EU institutional investors (or equivalent non-EU investors), and at least one of the originator, sponsor or