On 19 July 2012, the CSSF published a FAQ on securitisation. This FAQ is addressed to regulated securitisation vehicles as contemplated by Article 19 of the Law of 21 March 2004 on securitisation (the "Law of 2004"). This FAQ replaces the explanations given by the CSSF on the supervisory review of regulated securitisation vehicles set out in its 2007 annual report and presents such previously existing guidelines in a more structured manner.
The CSSF has also added some new topics, notably:
(i) Regarding the various forms of securitisations of receivables
In its FAQ No. 7, the CSSF considers the various forms of securitisations of receivables among which is the more traditional true sale of a receivable to the securitisation vehicle as well as synthetic securitisations. Furthermore, the relevant FAQ discusses the conditions where the securitisations vehicle grants itself loans instead of acquiring a receivable on the secondary market. The CSSF stresses that for the latter case, such conditions will be appreciated on a case-by-case basis and that in light of the ongoing discussions on "shadow-banking" on an international level, the legal and regulatory environment may change in the future.
(ii) Which assets may be securitised?
The CSSF discusses in its FAQ No. 8 which other types of assets and risks may be securitised. The CSSF points out that the indication of the various underlying assets listed in that FAQ is not limitative and that such FAQ shall only give elements of information on the approach on the basis of which the CSSF will review any submissions. The securitisation of commodities is also envisaged.
(iii) Financing possibilities for securitisation vehicles
The FAQ document also discusses the possibility and the conditions pursuant to which securitisation vehicles may borrow funds either from external or intra-group financings in order to pre-finance the acquisition of the risks to be securitised.
(iv) Which securities may be issued?
The FAQ discusses which securities may be issued by a securitisation vehicle in the context of a securitisation transaction. The CSSF confirms that will be considered "securities" within the meaning of the Law of 2004, any securities which are governed by foreign law and to which the characteristic of "security" is recognised by its governing law or which constitute "securities" within the meaning of the directive of market and financial instruments.
(v) AIFMD and management of portfolio of assets
The CSSF points out that the Alternative Investment Fund Managers Directive of 8 June 2011, which is to be implemented into Luxembourg law by 22 July 2013, will have an impact on regulations applicable to the collective management of portfolios, so that the principles relating to the management of financial assets shall be reviewed/adapted, and/or the applicable supervisory review shall be completed.
(vi) Contact address in case of further securitisation questions
Lastly, the CSSF has created a specific email address, where parties concerned may contact the CSSF in case they have further questions on securitisation that have not been treated in the FAQ: securitisation.questions@cssf.lu
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
