Letter to European Commission: Article 5(1)(e) of the E.U. Securitisation Regulation: 5 November 2019

Article 5(1)(e) of the EUSR requires institutional investors to verify that “the originator, sponsor or SSPE has, where applicable, made available the information required by Article 7 in accordance with the frequency and modalities provided for in that Article”. The FMLC understands that the words “where applicable” are a source of significant legal uncertainty as to whether Article 7 applies indirectly to non-E.U. transactions and that the market has so far been unable confidently to settle on a common interpretation thereby resulting in unnecessary legal risks being borne by market participants.

The FMLC sent this letter to European Commission to offer its view that one of at least two plausible interpretations of the words “where applicable” offers the more workable approach, on the ground that it accords with historical and established market practice. The FMLC recommends this approach and calls on the Commission to issue guidance on the approach to the due diligence assessments of transactions involving Third Country entities, so as to promote legal certainty in this area.

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