UK Law and Practice Contributed by: Guy O’Keefe, Richard Jones, Oliver Wicker and Kate Patane, Slaughter and May
management and does not create a differen - tiation between the credit risk of the retained securitisation positions or exposures and those transferred to investors. 4.4 Periodic Reporting The UK Securitisation Regulations Framework (in the case of UK investors) and the EU Secu - ritisation Regulations (in the case of market - ing to EU investors, whether in the primary or secondary market) set out periodic reporting requirements for UK transactions, as described in 4.1 Specific Disclosure Laws or Regulations . Originators, sponsors and issuers are required to provide regular reports on the performance and underlying exposures of the securitised assets. These reports include data on the credit quality and cash flows of the assets, which must be made available to investors, potential inves - tors and the relevant authorities. The reports are typically required on a quarterly basis, but the frequency can vary depending on the asset type and the transaction’s structure. Non-com - pliance with these reporting obligations can lead to enforcement action by regulatory authorities, including fines or other penalties. The reports described above must be made available on standardised, prescribed templates in accordance with the FCA and PRA Rules. UK Market Abuse Regulation (MAR) reporting obligations can also apply in relation to inside information. 4.5 Activities of Rating Agencies The activities of credit rating agencies (CRAs) are regulated, with the key regulation being the Credit Rating Agencies Regulation (CRA Regu - lation), which is retained EU law, with CRAs supervised by the FCA. The FCA ensures CRAs adhere to standards of integrity, transparency
and analytical rigour by requiring they are reg - istered, disclose and manage conflicts of inter - est, and apply appropriate rating methodologies. Enforcement of rules can lead to sanctions, fines or suspension of the CRA’s registration. 4.6 Treatment of Securitisation in Financial Entities In the UK, capital and liquidity rules apply for banks, insurers and regulated financial enti - ties, and are broadly aligned with international standards. For banks, such holdings are gov - erned by the Capital Requirements Regulation (CRR), which incorporates Basel III and dictates the risk weighting applied to securitisation posi - tions to determine regulatory capital require - ments. Under Solvency II, insurers (and reinsur - ers) must also hold capital against securitisation investments on a similar basis. Under HM Treas - ury’s project to replace assimilated law relating to financial services (referred to as the Smarter Regulatory Framework), most firm-facing provi - sions of the CRR and Solvency II assimilated law will be replaced by the PRA Rules. Consultations were undertaken by the PRA in respect of the CRR in 2024 (including but not limited to the definition of capital, the Pillar 2A capital frame - work, the capital buffers policy framework and the revocation of CRR requirements relating to the definition of own funds), together with the implementation of the conclusions of the Sol - vency II Review. All these institutions must also adhere to liquid - ity requirements, ensuring sufficient high-quality liquid assets to cover short-term liabilities. These rules aim to mitigate systemic risk and ensure financial stability. Non-compliance with capital and liquidity requirements can result in penal - ties, increased capital charges or other regula - tory actions.
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