Brexit - impacts and changes for securitisations in the UK and Europe

Securitisation remains one of the most effective and efficient forms of financing to support business growth and development. In spite of years of regulatory interference, delay and badly developed regulation the market continues to operate, admittedly at significantly reduced levels. The UK now has the opportunity to re-establish a securitisation regulatory regime that is effective and more appropriate to the risk and structures involved. This is however likely to be some way off as participants initially continue to operate within the current regulatory framework.

With effect from 1 January 2021, businesses looking to use securitisation to fund activities have been faced with a challenging interplay of EU and UK regulation as the UK establishes its framework outside the European Union. Activity within the European securitisation market transcends national European boundaries, and participants need to evaluate the consequences, for existing issuances and new issuances, of the UK leaving the EU and becoming a “third country” from a European securitisation perspective. 

The DLA Piper securitisation team’s paper, Brexit - impacts and changes for securitisations in the UK and Europe, aims to assist potential issuers and other participants work through the complex interaction of EU and UK legislation. The new UK legislative regime adopts the position of the EU Securitisation Regulation as at 31 December 2020 and develops that position for the purposes of the UK securitisation market. We look at what has changed, and at what sponsors, originators, issuers and investors will need to know in order to comply with the requirements applying in the UK whilst continuing to comply with the rules now applying in the EU. 

This paper is one of several on DLA Piper’s client-facing securitisation pages which form part of its Investment Rules of the World resources. The securitisation pages include a dual law Securitisation Regulation text, which shows the similarities and differences between the two regimes, and which is amended as necessary from time to time (as, for example, it will be to accommodate the EU “quick fix” amendments once they have gone through the jurist/linguist process). The text contains links to relevant EU and UK level 2 and 3 texts, and indeed much more background and related materials, including over 30 commentaries on different aspects of the UK and Europe securitisation regime.