The Managed Funds Association (MFA) has written to the UK’s Financial Conduct Authority (FCA), suggesting improvements to the securitization regulation. In the letter, the State Department proposed amendments aimed at expanding capital investment and improving risk management on behalf of investors.
The FCO letter comes ahead of the UK’s securitization regulation repeal expected in the third quarter of 2023. In the document, the association urged the financial regulator to address regulatory redundancies in the securitization market and ensure alignment with other markets, including the US.
“FCA has an opportunity to enable UK investors to better participate in global securitization markets and compete on a global stage,” said Jennifer Hahn, Senior Adviser and Head of Global Regulatory Affairs at the FCO. “Addressing the dual requirements of current regulations will ensure alternative managers have the tools they need to manage risk and deliver reliable returns to investors, including UK retirees.”
Specifically, the FCO urges the UK regulator to exclude alternative investment fund managers from the scope of due diligence requirements. According to the association, alternative investment fund managers (AIFMs) are already subject to a wide range of requirements under the Alternative Investment Fund Manager Directive (AIFMD).
Due diligence for risk retention
Furthermore, the State Department said the due diligence requirement to retain risk under securitization market laws prevented AIFMs from investing in many US securitization securities. This, according to the association, is despite the fact that US regulations have similar risk retention rules to those of the FCA. Besides, the group said risk retention requirements include standards that are difficult for AIFMs to meet.
“Members of the State Department have found, in their experience, that US securitizations compliant with risk retention requirements under the SEC Reg and EU SR are in the minority, despite the fact that US originators/sponsors are required to retain their interest in transactions, but are able to do so by Specific modalities are different, which may make it difficult for AIFM to verify on a deal-by-deal basis.” He said.
ASIC revokes the license; BaFin investigates illegal commercial brands; Read snippets of today’s news.
The Managed Funds Association (MFA) has written to the UK’s Financial Conduct Authority (FCA), suggesting improvements to the securitization regulation. In the letter, the State Department proposed amendments aimed at expanding capital investment and improving risk management on behalf of investors.
The FCO letter comes ahead of the UK’s securitization regulation repeal expected in the third quarter of 2023. In the document, the association urged the financial regulator to address regulatory redundancies in the securitization market and ensure alignment with other markets, including the US.
“FCA has an opportunity to enable UK investors to better participate in global securitization markets and compete on a global stage,” said Jennifer Hahn, Senior Adviser and Head of Global Regulatory Affairs at the FCO. “Addressing the dual requirements of current regulations will ensure alternative managers have the tools they need to manage risk and deliver reliable returns to investors, including UK retirees.”
Specifically, the FCO urges the UK regulator to exclude alternative investment fund managers from the scope of due diligence requirements. According to the association, alternative investment fund managers (AIFMs) are already subject to a wide range of requirements under the Alternative Investment Fund Manager Directive (AIFMD).
Due diligence for risk retention
Furthermore, the State Department said the due diligence requirement to retain risk under securitization market laws prevented AIFMs from investing in many US securitization papers. This, according to the association, is despite the fact that US regulations have similar risk retention rules to those of the FCA. Besides, the group said risk retention requirements include standards that are difficult for AIFMs to meet.
“Members of the State Department have found, through their experience, that US securitizations compliant with risk retention requirements under the SEC Reg and EU SR are in the minority, despite the fact that US originators/sponsors are required to retain their interest in transactions, but are able to do so by Specific modalities are different, which may make it difficult for AIFM to verify on a deal-by-deal basis.” He said.
ASIC revokes the license; BaFin investigates illegal commercial brands; Read snippets of today’s news.