FRA sets controls for securitization of non-banking financial rights
Updated 10/23/2024 3:29:00 AM
Arab Finance: The Financial Regulatory Authority (FRA) has issued circular No. 7 of 2024 outlining new regulations governing the securitization of financial rights arising from non-banking financing activities and other sectors, as per a statement.
The circular applies to securitization activities conducted by companies that issue financial rights, including those outside the non-banking financial sector.
The circular aims to enhance market efficiency and protect the rights and interests of those involved in non-banking financial markets.
Securitization companies are now required to submit electronic files containing data on portfolios transferred for the issuance of securitization bonds.
These files must be submitted to the FRA within one month from the date of issuance of the letter, which was released on October 17th, 2024.
The FRA mandates that companies must ensure the securitization portfolio has not been previously referred in any securitization issue or to any financing entity or bank at the time the transfer takes effect.
Additionally, the assigning party must collect financial dues and transfer them to the custodian immediately upon receipt, ensuring the financial transactions remain outside the assigning party’s accounts.
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