BANK 4.6.19 Capital treatment to be based on economic substance

(1) The capital treatment of a securitisation exposure must be determined on the basis of the economic substance, rather than the legal form, of the securitisation structure. If a banking business firm is uncertain about whether a transaction is a securitisation, the firm must consult with the Regulatory Authority.
(2) Despite anything in these rules, the Regulatory Authority may look through the structure to the economic substance of the transaction and:
(a) vary the capital treatment of a securitisation exposure; or
(b) reclassify a transaction as a securitisation or not a securitisation, and impose a capital requirement or limit on the transaction.
Inserted by QFCRA RM/2017-2 (as from 1st April 2017).