Updated 05/02/2025
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Article 4 - Delegated Regulation 2023/2175

Article 4

Retention equivalent to not less than 5 % of the nominal value of each of the tranches sold or transferred to investors

The retention referred to in Article 6(3), point (a), of Regulation (EU) 2017/2402 (vertical slice) shall be fulfilled by any of the following methods:

(a)

direct retention of not less than 5 % of the nominal value of each of the tranches sold or transferred to investors;

(b)

the retention of an exposure which exposes its holder to the credit risk of each issued tranche of a securitisation transaction on a pro-rata basis of not less than 5 % of the total nominal value of each of the issued tranches;

(c)

the retention of not less than 5 % of the nominal value of each of the securitised exposures, provided that the retained credit risk ranks pari passu with or is subordinated to the credit risk securitised in relation to the same exposures;

(d)

the provision, in the context of an ABCP programme, of a liquidity facility, provided that all of the following conditions are met:

(i)

the liquidity facility covers 100 % of the share of the credit risk of the securitised exposures of the securitisation transaction that is funded by the ABCP programme;

(ii)

the liquidity facility covers the credit risk for as long as the retainer has to retain the material net economic interest;

(iii)

the liquidity facility is provided by the originator, sponsor or original lender in the securitisation transaction;

(iv)

the investors have been given access to information within the initial disclosure that enables them to verify that points (i), (ii) and (iii) are complied with.