The recent changes in the French securitization regulatory framework

The French Parliament adopted the bill on financial security on July 17, 2003. The reform now provides more flexibility and liquidity to the French securitization market and clarifies the legal and regulatory framework for the French securitization vehicle known in French as Fonds commun de Creances. A fonds commun de creances is a mutual debt fund with no separate legal identity whose sole purpose is the acquisition of receivables and the issuance of units representative thereof. The key changes introduced by the reform are summarized and include: 1. foreign custodian, 2. ring-fencing compartments, 3. applicable law for priorities, 4. enforcement of the related security, 5. collection accounts, 6. issue of debt instruments, and 7. use of credit derivatives.