GREECE Law and Practice Contributed by: Panagiotis (Notis) Sardelas, Matina Kagkelari and Anna Zlatoudi, Sardelas Petsa Law Firm
ant to Commission Delegated Regulation (EU) 2015/35 of 10 October 2014, supplementing Directive 2009/138/EC of the European Parlia - ment and of the Council on the taking-up and pursuit of the business of Insurance and Rein - surance (“Solvency II”), as amended and in force, when investing in securitisations. For this purpose, Solvency II originally divided securiti - sation positions into three categories for the pur - pose of calculating capital charges (type 1, type 2 and resecuritisation). The introduction of the STS categorisation under the EU Securitisation Regulation modified the Solvency II capital cali - brations relating to securitisations and replaced the original categories with senior STS, non- senior STS, non-STS and resecuritisations, for which different capital requirements apply. 4.7 Use of Derivatives According to the Securitisation Law, SPEs may enter into financial derivatives transactions for hedging purposes or for purposes related to securitisation. Furthermore, Article 21 of the EU Securitisation Regulation provides that for STS securitisations the use of derivative contracts shall be limited to the purpose of hedging the SPE’s interest rate or currency risk. These derivatives should be underwritten and documented according to common standards in international finance. The SPE shall not enter into derivative contracts for any other reason, and should ensure that the pool of underlying exposures does not include derivatives. Derivatives are generally regulated by Regulation (EU) 648/2012 of the European Parliament and of the Council of 4 July 2012, as amended (EMIR). An EU SPE entering into such contracts will be subject to obligations imposed under EMIR. For
EMIR purposes, an SPE would be considered to be a non-financial counterparty (NFC). EMIR provides, inter alia, for central clearing of derivatives, if certain thresholds are met, or for risk mitigation techniques, such as the exchange of collateral. Article 4 of EMIR provides for an exemption from the clearing obligation (and collateral posting obligation) for STS securitisa - tions if the counterparty credit risk is adequately mitigated – ie, if the following additional criteria under Article 2 of the Commission Delegated Regulation (EU) 2020/447 are met: • the counterparty ranks at least pari passu with the holders of the most senior notes (unless such counterparty is the defaulting or affected party); and • the most senior notes are subject to a credit enhancement of at least 2% of the outstand - ing notes. Under EMIR, as amended, financial counterpar - ties are solely responsible, and legally liable, for reporting derivative transactions on behalf of both counterparties, for the details of OTC derivative contracts concluded with an NFC that does not exceed the clearing thresholds (NFC-), and for ensuring the correctness of the details reported. See 4.3 Credit Risk Retention regarding the potential penalties that could be imposed for non-compliance with the limitations provided for in the EU Securitisation Regulation as regards derivative transactions. Pursuant to Greek Law 4209/2013 (Article 101), the HCMC supervises Greek NFCs in relation to their compliance with EMIR. In the case of a breach, penalties range from reprimands to administrative fines.
140 CHAMBERS.COM
Powered by FlippingBook