Background:

On October 1, SFA submitted a response to the European Commission’s (EC) Targeted Consultation on the Functioning of the EU Securitisation Framework in which the EC requests industry feedback on the EU securitization regulation requirements relating to investor due diligence, risk retention, and disclosure among other issues. SFA, the Association for Financial Markets in Europe (AFME), and the Australian Securitisation Forum (AuSF) submitted closely aligned feedback on the EU Securitization Regulation framework and requirements demonstrating the alignment of the global markets on this issue.

Key Points:

SFA highlights its prior advocacy position that EU institutional investors should conduct due diligence that is proportionate to the risk of a securitization position.

• SFA supports a principles-based, proportionate approach to investor due diligence requirements.
• SFA also highlights that while the proposed securitization regulations offer a high level of investor protection for those who invest in U.S. deals, the framework fails to widen both the investor and issuer base for structured products in the EU.
• SFA believes the European Commission should establish a comprehensible legal framework for market participants that does not include overly onerous due diligence requirements which create significant barriers to entry by discouraging investors from entering the market.