BANK 4.6.37 Early amortisation provisions

(1) An early amortisation provision in a securitisation is a mechanism that, if triggered, allows investors to be paid out before the originally stated maturity of the securities issued. An early amortisation provision may be controlled or non-controlled.

Note Triggers include economic triggers which are events that are economic in nature by reference to the financial performance of the transferred assets.
(2) An early amortisation provision is a controlled early amortisation provision if:
(a) the banking business firm concerned has appropriate capital and liquidity plans to ensure that it has sufficient capital and liquidity if the provision is triggered; and
(b) throughout the life of the securitisation (including the amortisation period) there is the same pro-rata sharing of interest, principal, expenses, losses and recoveries based on the firm's and investors' relative shares of the receivables outstanding at the beginning of each month.
(3) An early amortisation provision that fails to meet either requirement in subrule (2) is a non-controlled early amortisation provision.
Inserted by QFCRA RM/2017-2 (as from 1st April 2017).