CP18/22: Handbook changes to reflect the application of the EU Securitisation Regulation and the amendment to the Capital Requirement Regulation

Open consultation: CP18/22
01/08/2018
Consultation closed
01/10/2018
01/10/2018
Policy Statement
Winter 2018

The Securitisation Regulation and related amendment to the Capital Requirements Regulation (CRR) came into effect on 18 January 2018. Most of their provisions will come into effect on 1 January 2019. We are consulting on a number of changes to ensure that our Handbook is consistent with the directly applicable EU Securitisation Regulation and CRR amendment.

Read CP18/22

In this Consultation Paper we are proposing new application and periodic fees for the authorisation of Third Party Verification Agents (TPVs) under the Securitisation Regulation. These proposals are based on the requirements of the draft European Regulatory Technical Standards and on our existing framework for setting fees. We provide more information on TPVs below.

Role of a TPV

A TPV can be used by a sponsor, originator and Securitisation vehicle to check whether a Securitisation is compliant with Simple, Transparent and Standardised (STS) criteria, as set out by the Securitisation Regulation. Note that when using the services of a TPV, the sponsor, originator and Securitisation vehicle on one hand, and the institutional investors required to perform due diligence on the investment on the other hand, remain liable for their obligations under the regulation. 

TPV authorisation

HM Treasury has confirmed its intention to name us as the competent authority for the UK and as such we will be responsible for authorising TPVs from 1 January 2019.

This will be finally confirmed via the HM Treasury UK Statutory Instrument (SI) for Securitisation, which is expected to be laid in early December 2018.

If we are announced as the competent authority for TPVs, then TPVs will need to go through our authorisation process before starting business.​​​​

TPVs sending draft applications for authorisation

From October 2018, we will be accepting draft applications. After the SI is laid giving us the power to set fees, applicants will be able to formalise their applications by paying the fee.

To be kept up to date on this activity, email [email protected] to be added to the distribution list.

For those intending to apply to be a TPV please see the draft TPV application form.  You can submit a draft application to [email protected] if you would like us to review this prior to the application process being available.

Applying to be a TPV

Subject to meeting the conditions set out in article 28 of the Securitisation Regulations, any firm can apply to be a TPV as long as they have the necessary competence to carry out the assessment of STS securitisations.

That said, TPVs cannot be:

  • insurance firms
  • credit institutions
  • investment firms
  • credit rating agencies 

Additionally, among other conditions as set out in article 28, the Securitisation Regulation require TPVs to ensure that the performance of their other activities, if any, does not compromise the independence or integrity of their assessment and in particular, TPVs cannot provide any advisory, audit or equivalent service to the originator, sponsor or securitisation vehicle involved in the securitisation which they assess.

See our current authorisation process if you are interested in becoming a TPV. While we anticipate that the authorisation process for TPVs will be similar to this please note that some details will be different for TPVs. For example, the timescales for authorisation and the conditions against which the application will be assessed.

Who this applies to

This consultation will be of interest to:

  • entities which may wish to act as TPV agents
  • firms that are involved in securitisation markets either as institutional investors or manufacturers (originator, sponsor and special purpose vehicle) of securitisations

Next steps

This consultation is now closed. We intend to publish a Policy Statement making final rules in winter 2018.

See our Consultation Paper (CP18/30) on how we propose to amend the Decision Procedures and Penalties Manual (DEPP) and Enforcement Guide (EG) to reflect the changes introduced by the EU Securitisation Regulation and by HMT intending to lay an implementing SI before Parliament.