On 1 November, AIMA submitted a response to the UK Financial Conduct Authority’s (FCA) consultation paper (CP23/17) outlining proposed amendments to the UK Securitisation Regulation (UK SR).  The FCA’s proposals address many of the issues we have previously highlighted to policymakers.  However, the response also outlines a number of issues and suggestions for additional reform:

• Addressing elements of the UK SR that create a significant competitive impact disadvantage for UK AIFMs:  The UK SR prevents UK AIFMs and their international subsidiaries from investing in US Collateralised Loan Obligations (“CLO”), which are non-compliant, while their international competitors are unencumbered by such a requirement.  We outlined possible solutions to the competitive disadvantage that this creates. 

• Better define public and private securitisation within the UK SR: 
  • Revise the broad definition of securitisation, which creates many of the challenges our members face with respect to the UK SR and attendant compliance and reporting requirement.
  • Consider a more proportionate approach to reporting based on the needs of investors or provide the opportunity for investors to opt-in to alternative reporting arrangements where they believe these are sufficient for their needs
  • Listing should not be treated as the sole determinant of whether a transaction is deemed public or private.

• Clarification of what information an institutional investor should receive to conduct its due diligence:  The FCA has included a table prescribing what information must be provided by the originator, sponsor or SSPE to an institutional investor, as well as the frequency of such reporting.  We argued that these prescriptive guidelines are not consistent with the previously stated desire for a principles-based approach, and encouraged the FCA to consider removing the table or clarifying that the information and frequencies are optional or voluntary recommendations.

For further information, please contact Guillermo Pérez Molina, Private Credit Associate.