Abstract
A decade ago, the financial world was taken by surprise, when prominent credit institutions filed for bankruptcy. The financial crisis phenomena spurred the need for regulating Securitisation and enhancing the capital requirements framework. In response, the Basel Committee initiated the regulatory treatment for the Simple Transparent and Comparable Securitisation (STC Securitisation), the USA passed the Dodd–Frank Act and the EU introduced Securitisation Regulation No. 2017/2402 to address the causes and failures, which were identified, following the aftermath of this financial crisis. With this article, we aim to analyse the main provisions of the Regulation No. 2017/2402 on Malta as a jurisdiction for securitisation and provide an insight on the prospective market development. To reach our aim we analysed scholarly documentation (academic chapters, journals, articles and monographs), rules, guidelines, recommendations, directives and regulations and use the case study methodology, as suggested by Yin (2003) and Yazan (2015), on Malta. In our opinion, recently, Malta has made significant improvements in the securitisation sector, mostly evidenced by the introduction of the legislation. All interviewees emphasised that Malta has substantial opportunities for further growth in the securitisation market and it is encouraged to be exploited well.
Highlights
Securitisation is a structured process whereby homogenous financial assets are pooled, underwritten, and sold to outside investors in the form of securities (Sarkisyan and Casu 2013).The securitisation phenomenon originated in the United States of America (US), in the early 1970s, primarily with the structuring of mortgages loans by the US government agencies
This criterion would assist transaction parties to better evaluate the risk-return in a securitisation transaction, with the ability to compare across another securitisation
The regulation applies to selective financial counterparties, which includes: institutional investors exposed to a securitisation transaction, originators, original lenders, sponsors and Special Purpose Vehicles (SPV) (Article 1 of the regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for Securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/European Union (EU)
Summary
Securitisation is a structured process whereby homogenous financial assets are pooled, underwritten, and sold to outside investors in the form of securities (Sarkisyan and Casu 2013). Credit institutions moved away from the traditional view of deposit institutions to a more hybrid approach as purely intermediaries between borrowers and the capital markets, which shifted from the traditional “originate-to-hold” model to a more modernised “originate to distribute” model. This model has enabled credit institutions to collateralize assets for the issue of the short-term paper, whilst integrating this technique to manage its liquidity risk practices. The US implemented the Dodd–Frank Act in 2010 as a direct consequence of the financial crisis of 2007–2009 with strict rules for disclosure, risk retention, and credit rating reforms (Grima 2012). National Competent Authorities (NCAs) are empowered to issue sanctions and warnings, if rules are not adhered to
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
