The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021

Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation U.K.

30.—(1) Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation(1) is amended as follows.

(2) In Article 2(12) (definitions), after point (g) insert—

“(h) an FCA investment firm as defined by Article 4(1)(2AB) of Regulation (EU) No 575/2013(2);”.

(3) In Article 6 (risk retention)—

(a) in paragraph 4—

(i) at the start of the second subparagraph, for “The first subparagraph shall apply” substitute “Subject to the modifications for FCA investment firms in the third subparagraph, the first subparagraph applies”;

(ii) after the second subparagraph insert—

“In the case of FCA investment firms, compliance with the requirements set out in Article 79(b) of Directive 2013/36/EU of the European Parliament and of the Council(3) are modified in accordance with this subparagraph—

(a) FCA investment firms must have internal methodologies that enable them to assess the credit risk of exposures to individual obligors, securities or securitisation positions and credit risk at the portfolio level;

(b) the internal methodologies must not rely solely or mechanistically on external credit ratings; and

(c) where an FCA investment firm determines the amount of own funds that it should hold by reference to a rating by an external credit assessment institution or by reference to the fact that an exposure is unrated, this does not exempt the FCA investment firm from additionally considering other relevant information for assessing its allocation of internal capital.”;

(iii) in the final subparagraph, in point (a), after “‘credit institution’” insert “, ‘FCA investment firm’”;

(b) in paragraph 5—

(i) in point (c), after “Part Three, Title II, Chapter 2 of Regulation (EU) No 575/2013” insert “and Articles 132a to 132c of Chapter 3 of the Standardised Approach and Internal Ratings Based Approach to Credit Risk (CRR) Part of the PRA Rulebook”;

(ii) after point (e) insert—

“In this paragraph ‘PRA Rulebook’ means the rulebook published by the PRA containing rules made by that Authority under the 2000 Act as that rulebook has effect on 1 January 2022.”.

(4) In Article 29 (designation of competent authorities)—

(a) in paragraph 1, for point (e) substitute—

“(e) where the institutional investor is a CRR firm, by the PRA;

(f) where the institutional investor is an FCA investment firm, by the FCA.”;

(b) in paragraph 3, for “or a CRR firm” substitute “, a CRR firm or an FCA investment firm”;

(c) in paragraph 3B, after point (b) insert—

“(ba) ‘FCA investment firm’ has the meaning given by Article 4(1)(2AB) of Regulation (EU) No 575/2013;”.

(5) In Article 43 (transitionals)—

(a) in paragraph 5, in the second subparagraph, in point (a), for “regulation 30(3) of the Securitisation (Amendment) (EU Exit) Regulations 2019” substitute “paragraph 6”;

(b) in paragraph 6, in the first subparagraph, after “as defined by Article 4(1)(2A) of Regulation (EU) No 575/2013” insert “as that Regulation had effect on IP completion day”.

Commencement Information

I1 Reg. 30 in force at 1.1.2022, see reg. 1(3)

(1)

EUR 2017/2402, amended by S.I. 2019/660.

(2)

EUR 2013/575; point (2AB) is prospectively inserted by section 1(4) of the Financial Services Act 2021 (c. 22).

(3)

Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).