Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

Article 9 Retention option (e): retention of a first loss in every securitised exposure

  1. (1)

    The retention of a first loss exposure at the level of every securitised exposure in accordance with point (e) of the second subparagraph of Article 405(1) shall be applied so that the credit risk retained is always subordinated to the credit risk that has been securitised in relation to those same exposures.

  2. (2)

    The retention referred to in paragraph 1 may be fulfilled by the sale at a discounted value of the underlying exposures by the originator or original lender, where the amount of the discount is not less than 5 % of the nominal value of each exposure and where the discounted sale amount is only refundable to the originator or original lender where it is not absorbed by losses related to the credit risk associated to the securitised exposures.