Irish Implementation of the Securitisation Regulation & European Market Update
21 Feb 2019
Ireland recently published the European Union (General Framework for Securitisation and Specific Framework for Simple, Transparent and Standardised Securitisation) Regulations 2018 ("Irish Regulations") to give further effect to Regulation (EU) 2017/2042 ("Securitisation Regulation"). The Irish Regulations came into force on 1 January 2019 and apply to all in scope securitisation transactions.
Who is your Competent Authority?
The Central Bank of Ireland (the "CBI") has been appointed as the competent authority for securitisations for Irish institutional investors , originators, sponsors, original lenders and securitisation special purpose entities ("SSPEs").
Notice of Securitisation
An Irish originator, sponsor and SSPE (where applicable) each must notify the CBI of a securitisation not later than 15 business days after the first issue of securities of that securitisation ("CBI Notice"). The CBI Notice shall specify the Securitisation Regulation classification of the person making the notification and include the following information:
- the ISIN (international securities identification number) of the securitisation; and
- the name, registered office, corporate status and LEI (legal entity identifier) of each of the originator, sponsor and SSPE in respect of the securitisation, as well as identifying the designated reporting entity under the Article 7 transparency requirements of the Securitisation Regulation.
Method of Filing
SSPEs which qualify as financial vehicle corporations ("FVCs"), pursuant to Regulation ECB/2013/40 (the "FVC Regulation"), should file the CBI Notice through the same channel used for complying with reporting obligations under the FVC Regulation. An Irish corporate services provider ("CSP") is normally engaged by an Irish SSPE to complete FVC reporting and so will be familiar with how this works in practice.
Irish-regulated originators and sponsors should use pre-existing channels of communication with their Irish competent authority to complete the notification.
Most SSPEs will be FVCs, but for those that are not (e.g. if more than 50% of their activity is loan origination) or for any non-regulated Irish originators, the CBI Notice should be sent to email@example.com.
Responsibility for Filing
Where the SSPE in a securitisation is an Irish entity (e.g. for a European CLO, CMBS or marketplace securitization or any Irish asset backed deal), the transaction documentation will usually specify that the SSPE is responsible for completing the CBI Notice. The CSP or Irish counsel will generally complete the filing for the SSPE in practice.
Given the Irish Regulations suggest each relevant person must make a notification, where the originator or sponsor in the securitisation is also an Irish entity and absent further CBI guidance, each such person should also complete a CBI Notice.
Access to Article 7 Information / Ongoing Reporting
As of the date of this update, the CBI has not issued any guidance on whether or how it is to receive or access the information to be made available under Article 7 of the Securitisation Regulation. Furthermore, it has not prescribed any methods for ongoing filings to be made in respect of event-based reporting (as the UK Financial Conduct Authority has for private securitisations).
While we do not anticipate the CBI imposing additional Irish reporting requirements, transaction documentation should allow any Irish SSPEs, originators or sponsors to direct the designated reporting entity (or its agent) to make available the relevant reportable information in such manner as the CBI may require in future.
The CBI has wide powers to supervise and enforce compliance with the Securitisation Regulation and the Irish Regulations in respect of regulated and non-regulated firms (e.g. SSPEs and certain originators). These include a general power to issue directions to market participants to compel or cease various actions in order to ensure the integrity of financial markets or enhance investor confidence.
Where negligent or intentional contraventions of the Securitisation Regulation or the Irish Regulations are suspected in respect of a non-regulated firm, the CBI may appoint an assessor to investigate and make determinations. In this regard, each SSPE should seek reasonable assistance covenants from relevant deal counterparties in the transaction documents to enable it to comply with its obligations in such a scenario. Similarly, the costs of an SSPE in complying with its obligations under the Irish Regulations should be provided for in the transaction documents as appropriate.
In respect of regulated Irish firms (including Irish institutional investors), the CBI's existing powers of supervision and enforcement have been extended to include compliance with the Securitisation Regulation.
Sanctions and Offences
The administrative sanctions that can be imposed by the CBI under the Irish Regulations track the sanctions set out in Article 32(2) of the Securitisation Regulation. Ireland has not sought to 'gold-plate' the Securitisation Regulation as part of the implementation process.
The Irish Regulations do not create any criminal offences for breaches of the Securitisation Regulation itself. However, there are 'failure to cooperate' and 'false/misleading information provision' types of offences in respect of any CBI exercises of its prescribed powers (e.g. a failure to comply, without reasonable excuse, with a request from a relevant CBI officer). For more information regulated and non-regulated firms should consult counsel dealing with any CBI request made pursuant to the Irish Regulations.
The Irish Regulations and CBI guidance to date represent a sensible Irish implementation of the Securitisation Regulation and further underline Ireland's leading position as a hub for European securitisations.
For further information, please liaise with your usual Maples Group contact or any of the contributors.
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