On 18 July 2019, the Law of 16 July 2019 (the “New Law”) implementing, among others, Regulation (EU) 2017/2402 of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation (the “Securitisation Regulation”) was published in the Luxembourg Official Gazette.
We previously discussed the Securitisation Regulation in our January 2019 Newsletter but to give a short recap: the aim of the Securitisation Regulation is to strengthen the legislative framework implemented after the financial crisis to address the risks inherent in highly complex, opaque and risky securitisation. It was considered essential to ensure that rules would be adopted to better differentiate simple, transparent and standardised products from complex, opaque and risky instruments and to apply a more risk-sensitive prudential framework. Although being directly applicable in the Member States, the Securitisation Regulation contains certain provisions which require further transposition into national law, which Luxembourg has done pursuant to the New Law.
The New Law designates the competent authorities in Luxembourg, i.e. the CSSF and the “Commissariat aux Assurances’’ (the “CAA”) responsible for supervising compliance with the obligation laid down in Articles 6 to 9 of the Securitisation Regulation. The CSSF is also the competent authority responsible for supervising compliance with Articles 18 to 28 of the Securitisation Regulation. The New Law empowers both the CSSF and the CAA with the supervisory and investigative powers necessary for the exercise of their respective tasks within the limitation of the Securitisation Regulation. Both authorities are granted the power to impose administrative sanctions and other administrative measures. The securitisation entity and members of its management body/ies (including natural persons) can be subject to sanctions under the New Law. The New Law also provides the right of recourse which allows the subject to challenge the decision made by the CSSF and the CAA within one month in front of the administrative court. Furthermore, it also regulates the publication of sanctions.
The New Law entered into force on 22 July 2019.