New European regulatory framework for securitization

1. Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitization and creating a specific framework for simple, transparent and standardised securitization, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (the “Securitization Regulation” or the “Regulation”).
2. Regulation (EU) 2017/2401 of the European Parliament and of the Council of  12 December 2017 amending Regulation (EU) No. 575/2013 on prudential requirements for credit institutions and investment firms (the “CRR Novation Regulation”).

Although these two Regulations still require the development of various technical rules, they form a new homogeneous legislative framework for European securitization operations, providing a detailed definition of the concept of simple, transparent and standardized (“STS”) securitization, and dispelling uncertainty as to the weightings applicable in securitization transactions in respect of capital requirements, the retention demands being less stringent in the case of transactions which can be considered STS for the purposes of the new rules.

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