Originators or sponsors Sample Clauses

Originators or sponsors should not take advantage of the fact that they could hold more information than investors and potential investors on the assets transferred to the SSPE, and transfer to the SSPE assets whose credit risk profile is higher than that of comparable assets held on the balance sheet of the originators, without the knowledge of the investors or potential investors. A breach of this obligation should be subject to sanctions to be imposed by competent authorities, though only when such a breach is intentional. Negligence alone should not be subject to sanction under this provision. This obligation should however not prejudice in any way the right of originators or sponsors to select assets to be transferred to the SSPE that ex-ante have a higher than average credit risk profile compared to the average credit risk profile of comparable assets that remain on the balance sheet of the originator, as long as the higher credit risk profile of the assets transferred to the SSPE is clearly communicated to the investors or potential investors. Competent authorities should supervise compliance with this obligation by comparing the assets underlying a securitisation and comparable assets held on the originator's balance sheet. The comparison of performance should be done between assets that are ex-ante expected to have similar performances, for example between non-performing residential mortgages transferred to the SSPE and non-performing residential mortgages held on the balance sheet of the originator. There is no presumption that the assets underlying a securitisation should perform similarly to the average assets held on the originator's balance sheet.