UK Law and Practice Contributed by: Guy O’Keefe, Richard Jones, Oliver Wicker and Kate Patane, Slaughter and May
ing securitisations to issue notes targeted at investors in different jurisdictions. 3.10 Offering Memoranda A prospectus is typically required when securities are offered to the public or admitted to trading on a regulated market. A prospectus will set out detailed information on the offer and the issuer in a manner that is consistent with the applicable legal requirements (if issued in the UK, the Pro - spectus Regulation (EU) 2017/1129 as retained and amended by UK law post-Brexit; if issued in the EU, the very similar EU Prospectus Regu - lation (EU) 2017/1129). For private placements or transactions not involving public offerings or regulated markets, the issuer will instead pub - lish a transaction summary, with less extensive/ detailed content. In addition to the disclosure requirements relat - ing to the offer of securities to the public (see 3.10 Offering Memoranda ), there are also spe - cific disclosure regulations applicable to inves - tors in the UK under the UK Securitisation Regulations Framework Rules and to investors marketed from the EU (ie, in the primary market and, where perceived necessary, the secondary market) under the EU Securitisation Regulations. The originator, SPE and any sponsor are jointly responsible for providing the required informa - tion, although one of them must be designated as the entity that fulfils the requirements in prac - tice. Information required to be made available includes loan level performance data (on the basis of prescribed templates), as well as the 4. Laws and Regulations Specifically Relating to Securitisation 4.1 Specific Disclosure Laws or Regulations
transaction documents and investor reports. In the case of a public securitisation (determined by reference to whether or not there is a pro - spectus), information must be made available by way of an authorised securitisation repository. 4.2 General Disclosure Laws or Regulations See 4.1 Specific Disclosure Laws or Regula - tions . 4.3 Credit Risk Retention Both the EU Securitisation Regulations and the UK Securitisation Regulations Framework man - date credit-risk retention to ensure that origina - tors or sponsors have “skin in the game”. The FCA and PRA Rules and the very similar EU Securitisation Regulations risk retention regime require a minimum risk retention of 5% of the credit risk of the securitised exposures. This can be done by way of (one of) a number of permit - ted methods, including by retention of a vertical slice of exposures, a first loss tranche and the maintaining of exposure to a random selection of assets that would otherwise be securitised. The FCA and PRA Rules are overseen by the FCA and (in the case of banks) the PRA, respec - tively, which enforce compliance through super - vision, auditing and sanctions. Penalties for non-compliance can include fines and other regulatory penalties. It is essential that the risk is retained for the life of the transaction. Hedg - ing or transferring of the retained exposure is permitted under the FCA and PRA Rules only where the hedge is: • not against the credit risk of either the retained securitisation positions or the retained exposures; and • undertaken prior to the securitisation as a prudent element of credit granting or risk
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