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Credit rating agencies (‘CRAs’) that operate in the EU will be interested to hear that on 30 March 2017, ESMA published an update to its Questions & Answers (Q&A) on the ‘CRA’ Regulation (Regulation 1060/2009, as amended in 2011 and 2013).  The CRA Regulation requires CRAs within the EU to be registered and to comply with requirements relating to their independence and avoidance of conflicts of interest, their methodologies, their disclosures and their approach to sovereign debt.  It also contains requirements on parties involved in securitisations in respect of the rating of structured finance instruments.
Continue Reading ESMA clarifies timelines for publication of credit ratings and rating outlooks

On 4 September 2013, the European Commission published a draft regulation on the regulation of European money market funds.  Money market funds are important investors in certain types of securitisation, particularly asset backed commercial paper, and the draft Regulation includes some detailed provisions dealing with this relationship.  This is explained in the recitals: “Due the fact that during the crisis certain securitisations were particularly unstable, it is necessary to impose maturity limits and quality criteria on the underlying assets”.  The limitations imposed are such that the only types of securitisation which are eligible are those with underlying assets consisting of short term corporate debts, such as trade receivables.  Assets linked to the acquisition or financing of services or goods by consumers (such as personal loans, auto loans,  credit card debts and residential mortgages) are expressly excluded.  The draft regulation also requires that the underlying corporate debts be “of high credit quality and liquid”.
Continue Reading Regulation of Money Market Funds and Securitisation

On 28 January the competent authority for supervising securities in Greece, the Hellenic Capital Market Commission (HCMC), made use of its powers of intervention in exceptional circumstances and decided to introduce yet another emergency measure under Article 20 of Regulation No 236/2012, also known as the EU Short Selling Regulation. As defined in the Regulation, short selling consists in the sale of securities that the seller does not own, with the intention of buying back an identical security at a later point in time in order to be able to deliver the security.
Continue Reading Hellenic Capital Market Commission – New Emergency Prohibition under the EU Short Selling Regulation

Further to proposals by the European Securities and Markets Authority (“ESMA”), the Prospectus Directive regime in Europe, particularly the requirements in relation to the form of prospectuses, transaction summaries, final terms and supplements have undergone some major changes. These changes have been brought about by amending the Prospectus Directive and the Commission Regulation (EC) No 809/2004 (the “Amending Regulations”), which came into effect on 1 July 2012. As a result, issuers with established programmes or those looking to establish new programmes will have to carefully consider the implications of the new requirements.
Continue Reading The EU Prospectus Directive Regime – Winds of Change