The wait is over as reporting to a UK securitisation repository commences and UK templates are published

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Hogan Lovells

[co-author: Jane Griffiths]

On 17 January 2022, European DataWarehouse Ltd and SecRep Limited were approved by the Financial Conduct Authority (FCA) as the first securitisation repositories (UK SRs) in the United Kingdom.

Originators, sponsors and securitisation special purpose entities (SSPEs) established in the UK must now commence reporting data for “public” securitisations to a UK SR, in accordance with Article 7(1)(g) of the securitisation regulation (Regulation (EU) 2017/2402, (EU Securitisation Regulation) onshored as part of the retained EU legislation) (UK Securitisation Regulation).

The FCA has also published new UK-formatted template forms for loan level data, investor and significant event reporting under the UK Securitisation Regulation which must be used after 31 March 2022.

The ESMA template forms may continue to be used until the upcoming March deadline. If reporting entities have not started to transition to the UK forms it is therefore recommended that they commence doing so as a priority.

Background

Article 7(1)(g) of the UK Securitisation Regulation requires originators, sponsors and SSPEs established in the UK (the “Reporting Entities”) to report any “public” securitisations within the scope of the UK Securitisation Regulation via a UK SR that is registered and supervised by the FCA.

Until now, no UK SRs had been approved and so Reporting Entities have been required to report data via a website meeting the technical requirements of Article 7 of the UK Securitisation Regulation instead. These requirements mirror the provisions of the EU Securitisation Regulation.

The FCA has now approved applications from European DataWarehouse Ltd and SecRep Limited to act as UK SRs, in accordance with the provisions of the UK Securitisation Regulation.

In addition, the FCA has also published new template forms for reporting.

From what date does the UK SR reporting obligation commence?

The obligation to report “public” securitisations, within the scope of the UK Securitisation Regulation, to a UK SR applies from 17 January 2022.

Following the UK’s exit from the European Union on 31 January 2020, in order to help firms adapt to the new requirements, HM Treasury gave UK financial regulators temporary transition powers (TTP) to make transitional provisions for certain financial services legislation for a temporary period up to 31 March 2022 (Transitional Period). The obligation to report to a UK SR was however excluded from the TTP and therefore, notwithstanding that the TTP continues until 31 March 2022, the obligation to report to a UK SR commences from the date that the FCA determines that the UK SRs are operative.[1]

Under the TTP, originators, sponsors and SSPEs are not required to use the new forms until after the end of the Transitional Period although if Reporting Entities have not started to transition to the UK forms it is recommended to do so in advance of the March deadline.[2]

What transactions must be reported?

Article 7(1) of the UK Securitisation Regulation requires that “public” securitisations must be reported via a UK SR. This limits the obligation to those securitisations which are listed on the UKLA's main market.

Notwithstanding the above, as part of the transposition of ESMA STS transactions onto the FCA’s register for simple, transparent and standardised securitisations (STS) effective on 1 January 2021 a number of Reporting Entities reported their STS transactions as “public” given that if Reporting Entities completed the “private” template these STS transactions would not appear publicly as they did on the ESMA STS register. Similarly, following Brexit, UK Reporting Entities in respect of STS transactions with an EU approved prospectus have completed the public and private template and have requested that the FCA report the STS transaction as public on the STS register. Indeed, for those UK STS transactions which are not RMBS, the significant majority do not have prospectuses approved by the FCA. UK Reporting Entities for these types of STS transactions will want to consider whether to voluntarily report to a UK SR assuming that the UK SR will accept their reporting.

Similarly, for investor marketing purposes, a number of transactions have contractually agreed to report to a UK SR for marketing purposes, those reporting entities will now need to voluntarily commence reporting to a UK SR.

What is the impact of UK SR reporting on existing securitisation transactions?

It is not just new transactions that need to be reported. Details of existing transactions that are within scope will need to be reported to the UK SR. For ABCP transactions and transactions where there has been a recent payment of interest, firms may need to start reporting very quickly in respect of the quarterly reports required under Article 7(1)(a) and (e) (i.e. where quarterly reports are required at the latest one month after the due date for the payment of interest or, in the case of ABCP transactions, at the latest one month after the end of the period the report covers).

Who must report?

UK Reporting Entities are responsible for reporting the transactions, as agreed between them in accordance with Article 7(2) of the UK Securitisation Regulation.

How to report?

The FCA has provided new UK versions of the XML schemas and validations rules on templates which are available on the FCA Securitisation Page. The FCA templates reflect the onshoring changes made under the Technical Standards (Specifying The Information And The Details of a Securitisation to be made available by the Originator, Sponsor and Issuer) (EU Exit) Instrument 2020.

For any transactions where dual compliance is required, for EU and UK requirements, both the FCA and EU templates may need to be completed.

Next steps

Now that the UK SRs have been approved the obligation to report to them applies with effect from 17 January.

UK Reporting Entities, should ensure that their systems are updated to adapt to this updated reporting requirement for both new and existing transactions and that documentation for new UK securitisation transactions reflects the changes.

References

[1] Anex A Application of the standstill direction to amendments made in Statutory Instruments and Exit Instruments amending technical standards to the FCA's main transitional directions provides that the standstill (i.e. delay in application of onshoring) will not apply to the technical standards relating to securitisation repositories, TPVs and STS notifications.

[2] Annex A Application of the standstill direction to amendments made in Statutory Instruments and Exit Instruments amending technical standards to the FCA's main transitional directions provides that the standstill (i.e. delay in application of onshoring) will not apply to the technical standards relating to securitisation repositories, TPVs and STS notifications.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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