New UK Securitization Regime Set to Start on November 1, 2024

The Securitisation (Amendment) Regulations 2024 were made on May 22, 2024 and come into force for the most part on November 1, 2024. The Amending Regulations supplement the new U.K. securitization regime established under the U.K. Securitisation Regulations 2024, including establishing November 1, 2024 as the commencement date for the Securitisation Regulations 2024. The Amending Regulations do not revoke the onshored EU Securitisation Regulation 2017, which will take effect through commencement regulations. The Securitisation Regulations 2024 designate, under the new designated activities regime, certain securitization activities when undertaken by a firm in the U.K. and introduce a new definition of "institutional investor", removing overseas Alternative Investment Fund Managers that market or manage AIFs in the U.K. from due diligence requirements.

The Amending Regulations also restate aspects of the onshored EU Securitisation Regulation 2017, including due-diligence requirements for trustees and managers of Occupational Pension Schemes and the prohibition on securitization special purpose entities in high-risk jurisdictions (with a modification to specify the application to institutional investors in addition to originators and sponsors). Certain other consequential amendments are made in connection with the future revocation of the onshored EU Securitisation Regulation or the introduction of the Securitisation Regulations 2024.

The new U.K. securitization regime has been developed as part of the U.K.’s smarter regulatory framework, and as such many of the firm-facing rules will be set out in the U.K. Financial Conduct Authority and Prudential Regulation Authority rulebooks. On April 30, 2024, policy statements were published by each of the FCA and PRA on their new rules for the incoming securitisation regime, which will apply from November 1, 2024, along with the rest of the new UK securitisation regime.

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