With just over three months until the European Securitisation Regulation comes into effect, this Note highlights that US investment managers should be aware of the possibility that they may be impacted by its provisions.
It is now just over three months until 01 January 2019, the date on which the EU’s Securitisation Regulation (the Regulation) takes effect.
I’m a US manager - why might this be important to me?
Until now, the provisions on investment in securitisations set out in the AIFMD have applied only to EU managers authorised as AIFMs. US managers have to date remained out of scope.
However, the way in which the new Securitisation Regulation defines the term “institutional investor” means that it would, on its face, apply equally to US managers who manage and/or market AIFs in the EU.
(Although the strict wording of the Regulation can be read to suggest that a US manager managing or marketing a single AIF into the EU would be subject to the Regulation in respect of all the AIFs it manages or markets (outside the EU as well as inside), we consider that the better view is that such an extension was unintended. In any event, it is hard to see how, in practice, the rules could be enforced against US managers in respect of AIFs which are neither managed nor marketed in the EU.)
Is it definite I will be affected from 01 January 2019?
As things stand, it is unclear whether the European legislators intended the Regulation to apply to non-EU AIFMs such as US managers.
So far at least there has been no guidance (formal or informal) either way from the European institutions or from the individual Member States regulators, such as the FCA.
We are monitoring the situation closely - if there is any change, we will announce it on elexica at the earliest opportunity.
What steps should I be taking now?
In the meantime, US managers would be advised to consider their position in the event that this issue is not satisfactorily resolved ahead of 01 January 2019 and that they find themselves within scope of the Regulation from that date.
For more information on the Regulation - including the due diligence and risk retention requirements it brings in - please see our earlier article here.
If you would like to speak to a lawyer in the Simmons & Simmons funds team about any aspect of this note, please see ‘Contacts’ above or speak to your usual contact.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.