UK PRA PS 19/25—Securitisation Prudential Reforms

PS 19/25 sets out the PRA’s approach in relation to the securitisation prudential reforms envisaged in its October 2024 Consultation Paper 13/24 (CP13/24) that the PRA regards as conceptually linked to the UK’s Basel 3.1 implementation. It includes (among other developments) reforms relating to SEC-SA p factor (a major development), the prudential treatment of HMT’s Mortgage Guarantee Scheme (MGS), the asset risk weight limits for prudential simple, transparent and standardised (STS) eligibility, and refinements to the credit risk mitigation approach hierarchy for securitisations. In line with the UK’s delayed Basel 3.1 implementation, these reforms will take effect on January 1, 2027.

By way of recap, this briefing also covers the securitisation-related content of PRA Policy Statement 12/25 (PS 12/25, published July 25). PS 12/25 set out the PRA’s approach in relation to the securitisation prudential reforms envisaged in CP 13/24 that the PRA regards as not being conceptually linked to the UK’s Basel 3.1 implementation. PS 12/25 included reforms relating to the use of unfunded credit protection in synthetic SRT transactions (a major development), and supervisory expectations regarding senior management’s role in overseeing SRT transactions. These reforms will take effect on January 1, 2026.

While the reforms in PS 19/25 and PS 12/25 are articulated as being “near-final”, rather than “final”, this is to facilitate publication, in Q1 2026, of a policy statement covering the entire UK Basel 3.1 implementation, and changes of substance are not expected.

Please note that this briefing does not cover the rules applicable to small domestic deposit takers (SDDTs) under the separate regime that applies to them. Please do not hesitate to get in touch with Jo Goulbourne Ranero, or your usual A&O Shearman contact(s), to discuss further.