Report

New UK Securitisation Rules Published

May 29, 2024

The UK Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) recently published their final rules relating to securitisation. Together with certain provisions under the Securitisation Regulations 2024 (as amended), the PRA and FCA Rules are expected to come into force on 1 November 2024 and to replace the UK’s existing securitisation regulation regime.

The EU Securitisation Regulation (Regulation (EU) 2017/2402, as amended) originally applied in the United Kingdom as part of EU law. Following the end of the Brexit transition period on 31 December 2020, the EU Securitisation Regulation was adopted into UK law in its then existing form and amended by way of the Securitisation (Amendment) (EU Exit) Regulations 2019 to ensure that it would operate effectively in the United Kingdom (as so amended, the UK Securitisation Regulation).

Under the Edinburgh Reforms, which seek to drive growth and competitiveness in the UK financial services sector, the government intends to deliver a “Smarter Regulatory Framework” tailored to the United Kingdom. The Financial Services and Markets Act 2023 provides for certain laws relating to financial services derived from EU law to be repealed. This includes the UK Securitisation Regulation and certain related regulations, which will be replaced with a new UK securitisation regime.

Following a period of consultation, the Securitisation Regulations 2024 were published on 29 January 2024. Certain aspects came into effect the following day, with the remaining provisions expected to come into effect on the date the UK Securitisation Regulation is revoked.

A statutory instrument, the Securitisation (Amendment) Regulations 2024, was made on 22 May 2024, effecting certain amendments to the Securitisation Regulations 2024. The Securitisation (Amendment) Regulations 2024 provide that most of the provisions of the Securitisation Regulations 2024 will have a commencement date of 1 November 2024.