Shearman & Sterling LLP | FinReg | UK Regulator Publishes Policy Statement on Supervisory and Enforcement Process for Securitization Repositories, including post-Brexit
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  • UK Regulator Publishes Policy Statement on Supervisory and Enforcement Process for Securitization Repositories, including post-Brexit
    06/06/2019
    The U.K. Financial Conduct Authority has published a Policy Statement setting out the final rules governing the FCA's authority to impose sanctions on persons for breaching requirements imposed under the U.K. Securitization Regulations 2018, which implements the EU Securitization Regulation. The Policy Statement also includes proposals on how the FCA will apply its existing supervisory and enforcement processes to securitization repositories (the bodies responsible for collecting and maintaining records of securitizations) after the U.K.'s exit from the EU.
     
    The EU Securitization Regulation currently governs securitization repositories throughout the EU, with the European Securities and Markets Authority acting as the supervisory body overseeing such repositories. The U.K. Securitization Regulations 2018 implement the EU Securitization Regulation in the U.K. by granting the FCA supervisory, disciplinary and investigatory powers over persons and firms in the U.K. subject to the EU Securitization Regulation. The FCA exercises these powers through rules set out in the FCA Handbook's Decision Procedure and Penalties Manual and Enforcement Guide. The original draft FCA rules were based on the draft U.K. Securitization Regulations 2018. However, the final version of the U.K. Regulations gives the FCA additional powers, namely the power to impose a suspension, condition, limitation or other restriction on persons for a breach of the U.K. Regulations. The FCA's Policy Statement and final rules therefore provide for the FCA's implementation of those additional powers. In particular, the FCA has developed decision-making procedures for (i) imposing a suspension, condition or limitation on an individual for a breach of a requirement imposed by the U.K. Securitization Regulations 2018; and (ii) imposing a suspension, limitation or other restriction on an authorized firm for a breach of a requirement imposed by the U.K. Securitization Regulations 2018.
     
    Separately, the Securitization (Amendment) (EU Exit) Regulations 2019, which will come into force on the day the U.K. leaves the EU, will transfer responsibility for supervising U.K. securitization repositories from ESMA to the FCA when the U.K. leaves the EU. The FCA's Policy Statement sets out near-final changes to the FCA Handbook's Decision Procedure and Penalties Manual and Enforcement Guide to provide for the registration and sanctioning of U.K. securitization repositories. Firms considering applying for registration as a securitization repository should wait until the Securitization (Amendment) (EU Exit) Regulations 2019 comes into effect before filing their formal application to the FCA.
     
    In addition to U.K. repositories, these final rules may be of interest to institutional investors in securitization markets, manufacturers of securitizations and managers at originators, sponsors or securitization special purpose entities.
     
    View the FCA's Policy Statement.
     
    View details of the Securitization Regulations 2018.
     
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