We were supportive of the intentions of the twin consultations which add welcome clarity and proportionality, without introducing many explicit new restrictions. But we noted that there seem to be to unexplained differences between the FCA and PRA rulebook wording. We recommended that there should be full harmonisation of drafting as both buy and sell-side parties will have to consult the requirements of each handbook. If they differ unnecessarily there are likely to be increased transactional analysis, legal and compliance costs which could impact on the UK’s international competitiveness and attractiveness as a venue for manufacturing securitsations. 

We also noted the value of a broad range of regulatory guidance, such as EBA Q&As much of which was in place before the UK left the EU, but some of which has been developed since and is instructive absent any similar corresponding UK material. We encouraged the PRA and FCA to acknowledge the on-going existence and applicability of this level 3 EU material for interpretation purposes. And we also encouraged the development of a replacement UK Q&A process.  

Securitisation is a process that is quintessentially cross-border in nature. UK investors invest in European securitisations and US investors in UK ones. So we welcomed the reforms in the proposed rulebooks that remove the current divergence between the UK and EU risk retention requirements.  A common theme from industry respondents to the FSB’s recent request for comments on the impact the G-20 reforms on securitisation had been concern at the multiplicity of risk retention regimes in different jurisdictions. We encouraged the UK authorities, as they continue their securitisation regulation reforms, to be ambitious and lead the way in enabling non-UK securitsation counterparties that comply with their own domestic retention rules that are considered ‘equivalent’ to the UK retention rules to be deemed to have met the UK’s requirements. 

And finally we suggested the UK authorities should introduce a simple, transparent and standardised (STS) regime for synthetic (on balance sheet) securitisations.