BANK 4.6.16 Requirements for clean-up calls — traditional and synthetic securitisations

(1) A clean-up call is an option that permits the securitisation exposures to be called before all of the underlying exposures or securitisation exposures have been repaid.
(2) There is no capital requirement for a securitisation that includes a clean-up call, if:
(a) the exercise of the clean-up call is at the discretion of the originator or sponsor;
(b) the clean-up call is not structured:
(i) to avoid allocating losses to credit enhancements or positions held by investors; or
(ii) to provide credit enhancement; and
(c) the clean-up call may only be exercised:
(i) for a traditional securitisation — when 10% or less of the original underlying pool of assets, or securities issued, remains; or
(ii) for a synthetic securitisation — when 10% or less of the original reference portfolio value remains.
Inserted by QFCRA RM/2017-2 (as from 1st April 2017).