
Securitization with MiFID involves handling and distributing securitized products like ABS, RMBS, CMBS, CLOs, and synthetic tranches under the Markets in Financial Instruments Directive (MiFID) and its regulation, MiFIR. This process combines product creation, market targeting, and control mechanisms, aligning them with the transparency and risk mandates of the Securitization Regulation.
MiFID II enhances product governance and transparency, setting clear guidelines for market targeting, client assessments, and cost disclosures.
Define target markets using ESMA’s categories and ensure that distribution strategies align with product complexity and sustainability attributes.
Comprehensive disclosures on costs and inducements ensure they enhance service quality and maintain client interests.
Implement policies to ensure best execution, and follow post-trade transparency rules using APAs for appropriate trades.
Address potential conflicts with structured policies and oversight committees to ensure impartiality and fairness.
Ensure originators or sponsors retain significant net economic interest and adhere to STS criteria for improved outcomes and confidence.
Public offerings require an approved prospectus, detailing risks and structural features, while considering exemptions where applicable.
PRIIPs KIDs are necessary for retail distribution, influencing certain sponsors to limit retail exposure.
Understand OTC derivatives' effects and ensure compliance with market and sustainability disclosure obligations.
Fill sustainability preferences into product assessments, ensuring alignment with client ESG priorities and preventing greenwashing.
Choose assets based on type, performance, and data availability, ensuring compliance with required standards.
Design tranches to suit investor risk profiles, supported by clear disclosure of structural features and risks.
Focus on transparent primary issuance processes and comprehensive documentation for secondary trading.
Maintain thorough documentation, including prospectuses and KIDs where retail distribution is considered.
Establish independent committees to oversee all aspects of product governance, from design to distribution.
Monitor conditions affecting credit, market, and liquidity risks while using models to project and mitigate potential impacts.
Implement stringent checks for retail products and detailed data tailoring for professional clients to ensure compliance.
Present balanced information that faithfully represents the product’s risk and reward profile.
Clarify all costs associated with securitization while strictly managing inducements to ensure client benefit.
Ensure accurate reporting using ARMs for transaction records and APAs for trade transparency.
Adopt robust data standards to facilitate efficient reporting and transparency.
Adapt strategies to regulatory differences between the EU and UK, focusing on transparency and disclosure requirements.
Develop effective strategies considering local rules and market access requirements.
Understand the capital benefits for investors holding compliant securitizations and ensure appropriate accounting practices.
Explore examples like auto ABS, RMBS, and CLOs to understand practical applications and distribution practices under MiFID.
Follow structured steps for seamless product launch and maintenance, from initial design to post-launch monitoring.
Mitigate risks such as inadequate market targeting, disclosure, and biases in distribution through stringent governance.
Stay updated on MiFID II revisions and ESMA guidelines, ensuring compliance with evolving standards for structured financial products.
Provide clear answers to common questions on securitization, distribution, and regulatory compliance.
Achieve successful securitization by aligning product structure with governance and transparency mandates, leveraging effective market strategies.
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