Asset-backed commercial paper meaning

In this issue: EU fundamentals Commercial Competition and state aid Corporate Free movement, immigration and employment Financial services Energy Environment Life sciences Regulatory TMT Daily and weekly news alerts New and updated content Trackers EU fundamentals European Commission releases October 2025 infringement package The European Commission has unveiled its October 2025 infringement package, identifying the EU Member States facing proceedings for breaches of obligations arising under EU law. The dossier covers letters of formal notice, reasoned opinions, and referrals to the Court of Justice addressed to Belgium, Malta, Estonia, Austria, Poland, Portugal, the Netherlands and a number of additional countries. Actions relate to multiple instruments and rules, notably Directive 1999/31/EC (Landfill Directive), Directive (EU) 2020/2184 (Drinking Water Directive), and Directive 2011/92/EU (Environmental Impact Assessment (EIA) Directive), among related matters. See: LNB News 08/10/2025 39. ...

EU developments EFAMA flags that ESMA's new Fund Naming Guidelines limit EU sustainable investment The European Fund and Asset Management Association (EFAMA) has cautioned that the European Securities and Markets Authority’s (ESMA) proposed Fund Naming Guidelines are not compliant and conflict with existing sustainable finance frameworks, such as the EU Green Bond Standard. EFAMA indicates that this misalignment could narrow the investable universe for green bond funds and, in consequence, impede the expansion of the EU corporate green bond market. See: LNB News 08/10/2024 42. Source: Fund naming guidelines put growth of corporate green bond sector at risk. Council of the EU approves climate conclusions ahead of COP 29 meeting The Council of the EU has endorsed conclusions on climate finance in advance of the United Nations Framework Convention on Climate Change (UNFCCC) session in Baku, Azerbaijan, running from 11 to 22 November 2024 (COP 29). The conclusions stress that the EU and its Member States remain committed to the existing target for developed nations to...

In this issue: UK, EU and international regulators and bodies Prudential requirements Operational resilience Financial crime and sanctions Consumer protection Investigations, enforcement and discipline Regulation of derivatives Sustainable finance and ESG Banks and mutuals Investment funds and asset management UK MiFID II Regulation of insurance FSMA 2023 FSMA regulated pensions activity Payment services and systems Fintech and cryptoassets Regulation of AI in FS LexTalk®Financial Services: a Lexis®Nexis community Financial Services Enforcement Database Daily and weekly news alerts Intraday news alerts New and updated content Dates for your diary UK, EU and international regulators and bodies The Financial Conduct Authority has issued Handbook Notice No 123, setting out amendments to the FCA Handbook agreed by the FCA Board on 29 and 31 October 2024. See: LNB News 01/11/2024 44. The FCA has also published replies to questions not addressed during its...

This Practice Note examines core aspects of the UK framework for money market funds (MMFs) that stems from Regulation (EU) 2017/1131 (the EU MMF Regulation). It also looks at suggested changes to the framework, with the Financial Conduct Authority (FCA), HM Treasury and the Bank of England (BoE) working jointly to bolster its resilience and align it with post‑Brexit regulatory objectives. For background on the EU MMF Regulation, see Practice Note: EU MMF Regulation—essentials. What is an MMF? Money market funds (MMFs) are investment funds that invest in short‑term debt instruments and so play a significant role in the short‑term financing of the economy. In particular, MMFs are open‑ended, liquid investment funds that invest in fixed income through short‑term debt, for example money market instruments issued by banks, governments or companies (including treasury bills, commercial paper and certificates of deposit) which pay interest. They therefore form an important connection between demand for, and the supply of, short‑term debt. Further information on the eligible assets of an MMF is...

Role The role of credit rating agents (CRAs) is to deliver an independent, analytical view of the likelihood of payment default, by assessing multiple factors that guide investors on whether to commit to specific securities. Capital market investors are highly sensitive to risk, and some are constrained by their internal constitutional documents from investing in lower grade instruments. As a rule, the greater the investment risk, the higher the return (interest/coupon) demanded by investors. Ratings may apply to both the company issuing the instruments and the instruments themselves. An issuer’s debt can be rated apart from the issuer, for example where the issuer is a special purpose vehicle created solely for the issuance, or where the debt benefits from credit enhancements (eg a guarantee) that lift it above the issuer’s own standing rating. For example, the following can be rated: the issuer senior debt/syndicated loans medium term notes (MTNs) commercial paper (CP) fixed income securities sovereign debt residential mortgage...

What does this Practice Note cover? This Practice Note explains the principal features of asset-backed commercial paper (ABCP), conduits and structured investment vehicles (SIVs). It also summarises the key legal and regulatory issues that shape their construction and application. What is asset-backed commercial paper? Commercial paper (CP) is a short-term debt instrument commonly issued by corporates or financial institutions to address near-term funding needs. It is typically unsecured and offered by issuers with strong credit ratings. For more detail on commercial paper, see Practice Note: Commercial paper and euro-commercial paper. ABCP is a type of CP that is secured against pools of assets, most often receivables delivering predictable cashflows. The issuer of ABCP does not itself require a high credit rating; investors assess the calibre and expected cash flow of the underlying collateral rather than the issuer’s credit profile. A wide range of assets may back ABCP, such as: credit card receivables residential and commercial mortgages commercial loans (eg auto loans...