Explanatory note

These Regulations are made in exercise of the powers in sections 8(1) and 23(1) and (2) of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018.

These Regulations make provision under the European Union (Withdrawal) Act 2018 to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the United Kingdom from the European Union (in particular, deficiencies of the kinds mentioned in paragraphs (a), (b), (f) and (g) of section 8(2)).

Part 2 amends Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation (“the Securitisation Regulation”). The Securitisation Regulation harmonises and reforms existing rules on due diligence, risk retention, disclosure and credit-granting which will apply in a uniform way to all securitisations, securitising entities and all types of EU regulated institutional investors, and creates a new framework for simple, transparent and standardised long-term securitisations and asset-backed commercial paper programmes.

Part 3 amends Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies. It substitutes a definition of ‘securitisation instrument’ for the definition of ‘structured finance instrument’.

Part 4 amends Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories.

Part 5 amends Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (“the Capital Requirements Regulation”). Chapter 2 of Part 5 amends provision about securitisation made in Chapter 5 of Title 2 of Part 3 of that Regulation.

Part 6 amends Commission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU) No 575/2013 of the European Parliament and Council with regard to liquidity coverage requirement for Credit Institutions.

Part 7 amends Regulation (EU) 2017/2401 of the European Parliament and of the Council of 12 December 2017, which amends the Capital Requirements Regulation. Article 2 makes transitional provision with reference to provisions of the Capital Requirements Regulation in the version applicable on 31 December 2018. Article 2 is amended so that those provisions have effect with appropriate modifications.

Part 8 amends subordinate legislation. Regulation 58 amends the Securitisation Regulations 2018 (S.I. 2018/1288), which make provision in relation to the Securitisation Regulation. The amendments, apart from the amendment in paragraph (6), are made in consequence of Part 2 of these Regulations.

These Regulations refer to the sourcebooks made by the Financial Conduct Authority under the Financial Services and Markets Act 2000 (c.8). Sourcebooks made by the Financial Conduct Authority are available on https://www.handbook.fca.org.uk/handbook and copies of the rules referred to can be obtained from the Financial Conduct Authority, 12 Endeavour Square, London E20 1JN, where it is also available for inspection.

An impact assessment of the effect that this instrument, and other instruments made by HM Treasury under the European Union (Withdrawal) Act 2018 at or about the same time, will have on the costs of business, the voluntary sector and the public sector is available from HM Treasury, 1 Horse Guards Road, London SW1A 2HQ and is published alongside this instrument at www.legislation.gov.uk.