FINLAND Law and Practice Contributed by: Maria Lehtimäki, Niklas Thibblin and Timo Lehtimäki, Waselius
4.6 Treatment of Securitisation in Financial Entities
mandatory provisions of the EU Securitisation Regulations regarding investor due diligence, reporting, risk retention and a ban on resecu - ritisation are all designed to protect investors and promote stability in the securitisation mar - ket. The provisions of the EU MiFID, EU Market Abuse Regulation, Prospectus Regulation and other applicable securities markets legislation must also be taken into account when selling securitisations. In addition, Finnish consum - er protection legislation on the sale of finan - cial instruments may become applicable. The national competent authorities, including the FIN-FSA in Finland, are tasked with supervising compliance with the investor protection provi - sions. Penalties for non-compliance include pro - hibition on operations, administrative fines, or criminal liability in certain cases. 4.9 Banks Securitising Financial Assets The Finnish Act on Credit Institutions (610/2014, as amended, implementing the EU capital requirements regime in Finland) regulates certain aspects of banks securitising their assets and investing in securitisation positions. Finland is a covered bond jurisdiction. The Finn - ish Act on Mortgage Banks and Covered Bonds (151/2022) regulates the licensing of mortgage banks in Finland and the issuance of covered bonds by Finnish mortgage banks. The act sets out requirements on certain operational matters and structures of covered bonds and their per - mitted collateral. It also regulates the disclosure requirements to investors and the treatment of covered bonds following the insolvency of a mortgage bank. 4.10 SPEs or Other Entities In Finnish transactions, the SPE is usually estab - lished offshore in an EU jurisdiction that is com - monly used for SPE structures. Where the SPE
The capital, liquidity and risk rules that apply to credit institutions and investment firms are set out in Regulation (EU) No 575/2013 on prudential requirements for credit institutions and invest - ment firms and amending Regulation (EU) No 648/2012 (the EU CRR) and its related directives, implementing domestic legislation, regulations and guidelines. Directive 2009/138/EC on the taking-up and pursuit of the business of Insur - ance and Reinsurance (“Solvency II Recast”) and its implementing domestic legislation, reg - ulations and guidelines set out the capital and liquidity rules that apply to insurance undertak - ings. The treatment of securitisation positions under capital, liquidity and risk rules is regulated by these pieces of legislation in detail, including the calculation of regulatory capital to be held with respect to securitisation exposures. 4.7 Use of Derivatives The use of derivatives under the EU Securitisa - tion Regulation is limited to hedging the SPE’s interest and currency risk. The key piece of leg - islation that applies to the use of derivatives by SPEs in securitisation transactions is Regula - tion (EU) No 648/2012 on OTC derivatives, cen - tral counterparties and trade repositories, as amended and recast (the “EMIR Recast”). The EMIR Recast contains requirements to report detailed information on each derivative contract to trade repositories and make the same avail - able to supervisory authorities, and generally to clear all standardised OTC derivatives contracts centrally through a central securities depository, or to apply risk mitigation techniques. 4.8 Investor Protection The EU Securitisation Regulation provides that securitisations may only be sold to retail clients subject to a suitability test. Furthermore, the
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