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JHA Opt-in Decision: Sovereign Bond Backed Securities

Volume 647: debated on Monday 15 October 2018

The Government have decided not to opt in to a provision in the proposed EU regulation on an enabling framework for sovereign bond backed securities that aims to remove unwarranted regulatory obstacles to the market-led development of sovereign bond backed securities (SBBS), which currently do not yet exist in practice. This is primarily a matter for member states in the euro area whose Government bonds would be included in the scope of the product and therefore whose national debt markets would be affected. The proposal is currently stalled due to significant opposition from member states and industry.

Article 17 of the proposed regulation requires that where member states have chosen to lay down rules for criminal sanctions, they shall ensure that information can be shared between competent authorities in the EU. As the provision requires co-operation involving law enforcement bodies, the Government believe these are JHA obligations and therefore our JHA opt-in is triggered.

The Government have decided not to opt in to these provisions as there are no significant benefits to be gained from doing so. The obligation to share information will only fall on member states who have a relevant criminal sanctions regime. The Government have no intention to introduce a criminal sanctions regime in a way that would lead to this regulation imposing an obligation on the UK or on our competent authorities.