European Securities and Markets Authority Launches Three Consultations on Technical Standards under the Securitization Regulation
12/19/2017The European Securities and Markets Authority has issued three consultations on technical standards under the new EU framework for simple, transparent and standardized securitizations. The new framework is made up of the STS Regulation and amendments to the existing Capital Requirements Regulation. The STS Regulation, which will come into effect in 2018, provides the criteria for identifying which securitizations will be designated as STS securitizations, a system to monitor the application of those criteria as well as common requirements on risk retention, due diligence and disclosure. The amended CRR sets out the regulatory treatment of exposures to securitizations that are deemed to be STS securitizations.
The STS Regulation requires originators and sponsors to notify ESMA when a securitization meets the STS criteria and ESMA will maintain a list of all such securitizations on its website. The STS Regulation allows (but does not require) originators, sponsors and SSPEs to use third-party firms to assess whether a securitization meets the STS criteria, provided that those firms are authorized by the relevant national regulator.
In addition, securitization special purpose entities, originators and sponsors of a securitization must make certain information available via a securitization repository to holders of a securitization position, to the national regulators and, upon request, to potential investors. Those securitization repositories are subject to certain operational standards and access to the data held by them is subject to certain conditions being met.
The consultation papers invite feedback on:
1. Draft Regulatory Technical Standards and draft Implementing Technical Standards on the content and format of the "Simple, Transparent and Standardized" notification.
2. Draft RTS and ITS on disclosure requirements, operational standards, and access conditions.
3. Draft RTS on the authorization requirements for third-party firms to provide STS verification services. The draft RTS set out the information to be provided by the third-party applicant firms in relation to their fee structure, independence, management body, the operational safeguards and internal processes that enable a firm to assess STS compliance and how the firm will prevent conflicts of interest.
ESMA invites comments on the consultations by March 19, 2018. ESMA expects to publish a final report on the technical standards for the STS notification and third-party application requirements by July 2018. It expects to publish a final report on the technical standards for the reporting requirements and operational standards/access conditions by the end of 2018.
View the consultation paper on draft technical standards on content and format of the "Simple, Transparent and Standardized" notification.
View the consultation paper on draft technical standards on disclosure requirements, operational standards, and access conditions.
View the consultation paper on draft technical standards on third-party firms providing STS verification services under the STS Regulation.