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Article 6 – Retention of randomly selected exposures equivalent to no less than 5 % of the nominal value of the securitised exposures ⬅️ | ➡️ Article 8 – Retention of a first loss exposure of not less than 5 % of every securitised exposure
Article 7 - Retention of the first loss tranche
1.
The retention of the first loss tranche referred to in Article 6(3), point (d), of Regulation (EU) 2017/2402 shall be fulfilled by any of the following methods:
(a)
holding either on-balance sheet or off-balance sheet positions;
(b)
holding an exposure by means of a provision of a contingent form of retention or of a liquidity facility in the context of an ABCP programme, which fulfils all of the following criteria:
(i)
the exposure covers at least 5 % of the nominal value of the securitised exposures;
(ii)
the exposure constitutes a first loss position in relation to the securitisation;
(iii)
the exposure covers the credit risk for the entire duration of the retention commitment;
(iv)
the exposure is provided by the retainer;
(v)
the investors have been given access within the initial disclosure to all information necessary to verify that points (i) to (iv) are complied with;
(c)
overcollateralisation, as defined in Article 242, point (9), of Regulation (EU) No 575/2013, if that overcollateralisation operates as a ‘first loss’ position of not less than 5 % of the nominal value of the securitised exposures.
2.
Where the first loss tranche exceeds 5 % of the nominal value of the securitised exposures, the retainer may choose to retain a pro-rata portion of such first loss tranche only, provided that that portion is equivalent to at least 5 % of the nominal value of the securitised exposures.