Document ID: chunk:federal_register_of_legislation:F2023L01572:reg:11:p3
Version: federal_register_of_legislation:F2023L01572
Segment Type: reg
Provision Reference: reg 11 (pt 3/7)
Character Range: 79175–82118

waiver.

Services
7.             In addition to the requirements in paragraph 1 of this Attachment, an ADI that provides a service to a securitisation must ensure that the formal written agreement specifies the services to be provided and any required standards of performance. These standards must be reasonable and in accordance with normal market practice. The agreement must explicitly state that the ADI has no liability with regard to the performance of the pool.
8.             There must not be an obligation for a servicing or managing ADI to remit funds to an SPV and/or investors until the funds are received from the pool, except where this is otherwise provided for in a separate facility (e.g. liquidity or other funding facility).
9.             An originating ADI providing a service to a securitisation must not subordinate, defer or waive the receipt of contracted fees or other income for its role as a service provider.

Representations and warranties
10.         An ADI that provides facilities or services to a securitisation may make representations and warranties concerning those facilities or services, provided the representations and warranties do not constitute implicit support. In particular, they must:
(a)          be provided by way of a formal written agreement and be in accordance with market practice;
(b)          refer to an existing state of facts that are capable of being verified by the ADI, and is within control of the ADI, at the time the facilities or services are contracted; and
(c)          not be open-ended and, in particular, not relate to the future creditworthiness of the exposures, the performance of the SPV or the securities issued in a securitisation.
[1]  prescribed New Zealand authority has the meaning given in subsection 5(1) of the Banking Act.
[2]  Payments to investors depend upon the performance of the underlying exposures, as opposed to being derived from an obligation of the entity originating those exposures. The tranched structures that characterise securitisation differ from ordinary senior/subordinated debt in that non-senior securitisation tranches can absorb losses without interrupting contractual payments to senior tranches, whereas subordination in a senior/subordinated debt structure is a matter of priority of rights to the proceeds of liquidation.
[3]  If a senior tranche is itself retranched or partially hedged, only the most senior tranche or hedged portion would be treated as senior for regulatory capital purposes.
[4]  Claims such as a swap claim, servicer cash advance, taxes and similar imposts and fees to service providers may be more senior in the cash flow waterfall and may be disregarded for the purpose of determining which positions are treated as senior.
[5]  The material effects of differing tranche maturities are captured by maturity adjustments to the risk weights assigned to the securitisation exposures under this Prudential