Sector developments and company hires

‘Big Bang 2.0’ to repeal Sec Reg
The UK government has introduced a Financial Services and Markets (FSM) Bill to Parliament, which will repeal retained EU law (REUL) and replace it with a comprehensive Financial Services and Markets Act (FSMA) model. Commonly known as ‘Big Bang 2.0’, the bill contains detailed proposals – outlined in a draft statutory instrument (SI) – to repeal the Securitisation Regulation and replace most firm-facing requirements with rules made by the FCA and the PRA, as well as restate certain other elements in legislation.

Specifically, the UK Treasury says it is committed to working with the FCA and the PRA to bring forward - where appropriate - reforms in: certain risk retention provisions (for example, in relation to transferring the risk retention manager and risk retention in NPE securitisations); the definitions of public and private securitisation, as well as the disclosure requirements for certain securitisations, to ensure they are appropriate; due diligence requirements for institutional investors when investing in non-UK securitisations, to provide greater clarity on what is required; and the definition of institutional investor as it relates to certain unauthorised non-UK AIFMs that are currently in scope of due diligence requirements, so that they are not disincentivised from seeking investors in the UK.

PCS notes that the draft SI includes a number of highly technical drafting changes, the implications of which are somewhat unclear, although the definition of ‘securitisation’ remains unchanged. The STS regime also remains in place, but the STS criteria have disappeared from the legislative text and are delegated to the FCA. Additionally, the third-party verification and data repositories regimes remain broadly unchanged.

Meanwhile, an equivalence regime for STS is set out, with the Treasury to decide which jurisdictions will be so treated. Similarly, while there is no requirement for an SPV to be domiciled in the UK, a securitisation originator/sponsor needs to be UK-based.

Notably, the text allows for resecuritisations, which are banned in the EU. However, resecuritisation transactions will need to be pre-approved by regulatory authorities on a deal-by-deal basis.

Retention and disclosure requirements are still in place. But PCS suggests that the text seems to allow non-UK issuers to sell to UK investors, provided they comply with substantially the same standards.

Overall, the FSM bill introduces what the government describes as “a range of new tools to enable the transition to the comprehensive FSMA model”, including a new Designated Activities Regime (DAR), which aims to provide a framework for regulating activities related to financial markets in “a proportionate way that reflects the degree of risk these activities pose”. The government has published two other draft SIs: one is in connection with the Prospectus Regulation, where the existing EU-derived framework will be replaced with a “simpler, more agile and more effective regime designed specifically for the UK”; the other contemplates giving the FCA rulemaking powers in relation to payments regulation.

Government says it will deliver its regulatory reform programme by splitting REUL into tranches, with work already underway on the first tranche, in relation to the outcomes arising from the Wholesale Markets Review, Lord Hill’s Listing Review, the Securitisation Review and the Review into the Solvency 2 Directive. The second tranche is focused on areas with the biggest potential benefits to deliver improvements to UK economic growth. The government expects to make “significant progress” on these tranches by the end of 2023.

In other news…

EMEA
Arrow Global Group has recruited Charlotte Gilbert as md for client and product solutions (CPS), the team responsible for setting the firm’s capital formation strategy and broadening its investor base. Gilbert has experience leading capital raising across credit, private equity, lending and real estate strategies and joins Arrow Global from Oaktree Capital Management, where she was md, marketing and client relations. Based in London, she will join Arrow’s executive committee on 2 January and report to the firm’s founder, ceo and cio Zach Lewy.

CBRE has appointed Chris Gow head of debt and structured finance. Based in London, he was previously an executive director at the firm, having worked at JLL, HMT, Candlewick Asset Management, Lloyds and Bank of Scotland before that.

Legal & General has named Roman Hederer head of investments (mortgages, housing) and risk sharing, responsible for the development and execution of risk-sharing solutions in mortgages, housing and middle market loans. Based in London, he was previously head of structuring and mortgage funding at the firm, which he joined in June 2016. Prior to that, Hederer worked at Merrill Lynch, JPMorgan and Allianz.