الهيئة العامة للرقابة المالية

• Securitization companies must provide an electronic file including data on portfolios they intend to securitize.
• Securitization companies are obligated to submit an electronic file including data on the transferred and outstanding securitization portfolios within a maximum of one month from the date of this circular.
• The assignor promptly transfers the collected financial receivables to the custodian as stipulated in the agreement.
• The Authority requires securitization companies to confirm that the portfolio being transferred has not been previously transferred in any securitization issuances or a bank or financial institution.

 FRA issued circular No. 7 of 2024, on regulating securitization companies. The Authority has issued this circular to fulfill its regulatory duties in non-bank financial markets, with the goal of protecting investors, enhancing market infrastructure and promoting market efficiency.

To obtain the Authority’s approval for securitization bonds backed by non-bank assets, securitization companies must submit an electronic file including portfolio data, as per the Authority’s specified template.

Securitization companies must submit an electronic file to the Authority within one month from the circular issuance, detailing all transferred securitization portfolios and their outstanding issuances, using the Authority’s specified templates. This is to ensure the Authority’s database is complete.

In this circular, the Authority relied on Article 41 bis (1) of the Capital Market Law, stipulating that ‘the transfer of the securitization portfolio shall be made pursuant to an agreement between the transferor and the transferee securitization company in accordance with the template prepared by the Authority. The transfer must be effective, final, and unconditional, transferring all rights, receivables, and collateral, and the transferor shall guarantee their existence at the time of transfer.’ Furthermore, the Authority applied Article 41 bis (7), which states that ‘the transferor shall disclose to the securitization company the information and data included in the securitization portfolio, without being bound by the provisions relating to bank secrecy as stipulated in the Central Bank and Banking System Law”.

To ensure market safety, the Authority requires the transferor to enter into an agreement with the securitization company mandating immediate transfer of collected receivables to the custodian, keeping these funds separate from the transferor’s accounts.

Furthermore, the Authority’s circular emphasizes that the securitization portfolio to be transferred must not have been previously transferred to any securitization issuance, financing entity, bank, or investment fund at the time of the transfer’s effectiveness. Additionally, the securitization portfolio must not serve as collateral for any loans or credit facilities. The circular also reaffirms that the securitization portfolio should not be subject to any liens or encumbrances in favor of third parties.

FRA is taking proactive steps to prevent the misuse of securitization portfolios. This includes strict prohibitions against multiple transfers and splitting transferred collaterals. Furthermore, FRA is establishing a comprehensive database to track all transferred portfolios.

These measures are designed to enhance the transparency and integrity of the securitization process and protect the interests of all market participants.