On July 19, 2012, the CSSF issued Frequently Asked Questions on securitisation, pertaining to securitisation vehicles authorised by the regulator under article 19 of the March 22, 2004 Securitisation Law. The FAQ replace the CSSF’s explanations on the practice of prudential supervision in this area set out in its 2007 annual report.
The FAQ provides answers and guidelines regarding the establishment of authorised securitisation undertakings, starting with explanation of key notions including securitisation undertaking, authorised vehicle and public offering, and information and documents to be provided to the CSSF upon submission of the application file and during the life of the vehicle.
The document provides a technical overview of securitisation transactions covering issues such as the form and type of securities, type of risks or assets, assumption of risks and creation of securities interest. It also sets out how the vehicle may be financed, for instance by borrowing or intra-group financing, and the organisation of the securitisation vehicle in terms of management of the undertaking.
The FAQ additionally covers permitted activities, in particular as regards management; rules applicable to the compartments of a securitisation vehicle; representation of investors; accounting rules; and liquidation or winding up of securitisation undertakings.
Regarding the management of financial assets, the CSSF has pointed out that the regulatory framework, and therefore the prudential regime applicable to collective portfolio management, will be adapted in the light of the implementation of the Alternative Investment Fund Managers Directive by Luxembourg, which is due before July 22, 2013.
In the meantime the FAQ may be consulted by clicking here.