AI Summary of Article 246 Operational requirements for early amortisation provisions
This guidance outlines the conditions under which significant credit risk is deemed transferred by an originator institution in the context of securitisations featuring revolving exposures and early amortisation provisions. It emphasises that such transfers only occur if the early amortisation provision, when triggered, does not compromise the senior or pari passu claims of the institution compared to other investors.
Furthermore, the provisions must not worsen the institution's claim relative to other parties nor exacerbate its exposure to potential losses inherent in the underlying revolving exposures. This ensures a clear delineation of risk and protects the integrity of the institution's claim structure.
Article 246 Operational requirements for early amortisation provisions
Where the securitisation includes revolving exposures and early amortisation provisions or similar provisions, significant credit risk shall only be considered transferred by the originator institution where the requirements laid down in Articles 244 and 245 are met and the early amortisation provision, once triggered, does not:
(a) subordinate the institution's senior or pari passu claim on the underlying exposures to the other investors' claims;
(b) subordinate further the institution's claim on the underlying exposures relative to other parties' claims; or
(c) otherwise increase the institution's exposure to losses associated with the underlying revolving exposures.