UK PRA launches public consultation on proposed reforms

UK PRA launches public consultation on proposed reforms

The UK Prudential Regulatory Authority (UK PRA) has taken a significant step forward by launching a public consultation on proposed changes to the retained EU Securitisation Regulation and the accompanying technical standards on risk retention and disclosure. The deadline for submissions is Monday 30 October 2023.

Rather than undertaking a complete overhaul, the UK PRA aims to introduce targeted adjustments to the existing EU securitisation framework with a target to implement the proposed changes by Q2'24.

At headline level, key changes include:

• Expanding its scope to one-off securitisation manufacturers¹The term ‘manufacturers’ is used as shorthand for originators, original lenders, sponsors, and securitisation special purpose entities (SSPEs), as defined in the proposed rules by UK PRA
• More principle-based due diligence obligations for institutional investors
• More proportionate risk retention requirements for NPE exposures
• Updated approach towards re-securitisation permissions
• Tweaks to manufacturer disclosure requirements

While adhering closely to the current technical standards, the UK PRA suggests

• Targeted adjustments to risk retention provisions
• No changes to disclosure requirements

Finally, the UK PRA seeks insights from stakeholders on possibly recalibrating the definition of public and private securitisations and developing more risk-based disclosure requirements.