UK Conduct Regulator Consults on STS Notifications under Onshored Securitization Regulation

The U.K. Financial Conduct Authority has launched a consultation on draft technical standards on the content and format of STS notifications under the U.K.'s onshored Securitization Regulation. The consultation closes on August 27, 2019. Unless Brexit is delayed further, the FCA intends to publish the final or near-final technical standards on or very near to Exit day, which is currently due to be October 31, 2019.

The EU Securitization Regulation, which has applied directly across the EU since January 1, 2019, provides the criteria for identifying which securitizations will be designated as "simple, transparent and standardized" (STS) securitizations. Exposures related to STS securitizations will attract lower risk weightings for firms subject to the Capital Requirements Regulation. Originators and sponsors must notify the European Securities and Markets Authority when a securitization meets the STS criteria. ESMA maintains a list of all such securitizations on its website. ESMA has submitted to the European Commission final draft technical standards on the notifications for STS securitizations, but they have not yet entered into force.

The U.K. Securitisation (Amendment) (EU Exit) Regulations 2019 transfers the responsibility for receiving STS notifications and maintaining a list of U.K. STS securitizations from ESMA to the FCA. The FCA is consulting on its proposed Binding Technical Standards for STS Securitization notifications under the U.K. Regulations. The consultation is being carried out before the EU technical standards enter into force as part of the preparation for a no-deal Brexit. If the EU technical standards enter into force before the U.K. leaves the EU, they will become part of the body of retained EU law under the EU Withdrawal Act. In that case, the FCA will consult on how to remedy deficiencies in the technical standards and the proposed BTS in this consultation would not come into force. However, the FCA believes that the BTS will be similar, regardless of the method by which they come into force.

The FCA's consultation sets out the proposed technical standards specifying the information that originators and sponsors are required to provide to comply with the STS notification requirement and the proposed technical standards establishing the templates to be used for the provision of the required information.

View the consultation paper.

View details of ESMA's final draft technical standards for STS notifications.

View details of the U.K. Regulations implementing the EU Securitization Regulation.

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