Knowledge Base
Analyze the role of funding vehicles such as securitization entities and specialized financial institutions
What percentage of risk must the originator retain in an STS securitization under the European regulation?
Article 6 of European regulation 2017/2402 requires the originator to retain 5% of the risk for STS securitizations. This aims to align the interests of originators with those of investors. For example, the securitization fund of Crédit Immobilier de France complied with this requirement.
What is the main purpose of securitization vehicles according to the Code monétaire et financier?
Securitization vehicles aim to transform illiquid assets into tradable instruments. According to articles L. 214-167 to L. 214-190 of the Code monétaire et financier, they acquire receivables and finance them by issuing financial securities, thereby improving asset liquidity. For example, the securitization fund of Crédit Immobilier de France securitized residential mortgage loans in 2019.
What are the two statuses created by ordonnance No. 2013-544 to replace specialized financial institutions?
Ordonnance No. 2013-544 created two new statuses: the specialized credit institution (receiving repayable funds from the public) and the financing company (carrying out credit operations without receiving such funds). These statuses aim to comply with European prudential requirements while preserving strategic missions.
What are the two main legal forms of securitization vehicles in France?
The two legal forms are the securitization fund and the securitization company. The securitization fund is a co-ownership without legal personality, while the securitization company takes the form of a public limited company or a simplified joint-stock company, with specific derogations from general company law. For example, a securitization company may enter into contracts in its own name and take legal action.
Unitholders of a securitization fund are liable for debts beyond the issue value of their units.
According to article L. 214-180 of the Code monétaire et financier, unitholders of a securitization fund are only liable for debts up to the issue value of their units. This constitutes an essential protection for investors.
The management company must obtain a specific authorization from the AMF to manage a securitization vehicle.
In accordance with articles L. 532-9, 311-3 and 316-5 of the AMF General Regulation, the management company must obtain a specific authorization to manage a securitization vehicle. AMF position DOC-2011-02 specifies that this extension of the activity program is necessary, as illustrated by the Smart Tréso FCT case in 2024.
STS label (securitization)
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The STS label (Simple, Transparent and Standardized) was introduced by European regulation 2017/2402 to identify securitizations that meet strict criteria of simplicity, transparency, and standardization. It includes requirements such as the originator retaining 5% of the risk and transparency obligations via a securitization repository.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Eligible assets
Legal provisions
Eligible assets include receivables (articles L. 214-169) while legal provisions relate to regulatory frameworks such as ordonnance No. 2008-556. For example, doubtful receivables are eligible under article R. 214-218.