Focus on securitisations: national compliance with EU regulations – Latest communications from the Bank of Italy

Prepared by Cristian Sgaramella, Roberto Percoco, Valeria Saponaro and Adele Zuliani

The Official Gazette No. 205 of 2 August 2022, General Series, published Legislative Decree No. 131, which entered into force on 3 September 2022, amending Legislative Decree No. 58/1998 “Testo Unico della Finanza” (“TUF”).

In particular, the legislative amendment of European Union Regulation No. 2017/2402 (hereinafter, the “EU Regulation”) defined, on the one hand, the authorities competent to compliance with the rules of securitization, from a general point of view and with reference to the specific case of simple, transparent and standardised securitisations, and, on the other hand, sanctioning system related to non-compliance.

The amended legislation identified the national authorities responsible for supervising compliance with the provisions of the EU Regulation. In this sense, without affecting the tasks incumbent on the BCE, the Bank of Italy, CONSOB, IVASS and Covip are identified as the competent national authorities under the EU Regulation.

First of all, according to the new article 4-septies.2 of the TUF, introduced by Decree no. 131/2022, the Bank of Italy is assigned the supervision of compliance with the requirements of Articles 6 (“Risk retention”), 7 (“Transparency requirements for originators, sponsors and SSPEs”), 8 (“Ban of resecuritisation“) and 9 (“Criteria for credit-granting”) by banks, investment firms, asset managers as well as financial intermediaries, that hold a position in a securitisation or are instructed to fulfil the obligations of another institutional investor, as well as on compliance with the same obligations where the originator, original lender, sponsor or SSPE is a bank, investment firm, manager or financial intermediary.

In addition, (i) IVASS and Covip will monitor compliance with the obligations established in Article 5 of the EU Regulation, “Due Diligence Obligations Requirements for Institutional Investors“, in the case of, respectively, insurance (or reinsurance) undertakings or pension institutions; (ii) CONSOB will monitor compliance with the obligations set forth in: a) Article 3, “Selling of Securitisations to Retail Clients” of the EU Regulation; b) by Articles 18 to 27 on the subject of STS securitisations and the authorisation of the third party verifier (referred to in Article 27 (2) of the EU Regulation), as provided for by Article 28 of the same EU Regulation, supervising the compliance of this entity with Article 28 of the EU Regulation, with the power to revoke the aforementioned authorisation.

In the second place, the legislative amendment has also affected the system of sanctions by introducing, in Article 190-bis.2, sanctions of a pecuniary and administrative nature (also of a prohibitory nature) provided for in the event of violation of the provisions of the EU Regulation.

With the goal to align the EU regulatory framework on securitisation, as well as to allow the main supervisory institutions to exercise the aforementioned powers, on 21 December 2022, the Bank of Italy published the first operational indications for supervised intermediaries. The communication ‘Modalità di implementazione dell’arti-colo 4-septies.2 del d.lgs. 58/1998 (TUF)‘ (‘Communication‘) established the operational procedures according to which the ‘less significant banks, SIMs other than class 1 banks, as defined by Art.1, paragraph 1, letter e-bis) of the TUF, the financial intermediaries ex 106 TUB and the Italian asset managers” must submit the notifications in relation to Articles 6 to 8 of the EU Regulation, where they act as originators, original lenders, promoters or special purpose vehicles.

The notification requirements of the Communication apply to all securitisation transactions issued after 1 January 2023. In fact, in accordance with the EU Regulation, as well as with the Bank of Italy Guidelines, the Bank has provided that the notification of compliance of the outstanding transaction must be submitted by letter signed by the head of the entity with management functions, within one month from the date of issuance, or within two months for transactions completed by 31 March 2023. In this regard, the supervisory functions are called upon to verify the adequacy ‘of the policies, procedures and specific measures adopted by the Supervised Intermediaries to ensure their effective ability to comply, on an ongoing basis, with the provisions of the Securitisation Regulation‘.

A more complete analysis to existing EU regulatory framework can be found in the article “ Focus on securitisation: national compliance with EU Legislation“, pg. 61 of the Magazine “Amministrazione e Finanza” No. 12/022, published by Wolters Kluwer.

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