European Banking Authority Consults on Simple Transparent and Standardized Criteria for ABCP and non-ABCP Securitizations

The European Banking Authority has published consultations on two sets of draft guidelines under the Securitization Regulation (also known as the STS Regulation) which, along with targeted amendments to the Capital Requirements Regulation, forms part of the new EU Securitization Framework for simple, transparent and standardized securitizations from January 2019. The STS Regulation establishes two sets of criteria for STS securitizations, namely for term (i.e. non-Asset Backed Commercial Paper) securitizations and for short-term (i.e. ABCP) securitizations respectively. The EBA is mandated under the STS Regulation to develop, by October 18, 2018, (i) guidelines and recommendations interpreting the STS criteria applicable to non-ABCP securitization; and (ii) guidelines and recommendations interpreting the transaction level and programme level criteria applicable to ABCP securitization.

The aim of the guidelines is to ensure a consistent interpretation and application of the STS criteria by the originators, sponsors, Securitization Special Purpose Entities and investors involved in the STS securitization, the national regulators designated to supervise the compliance of the entities with the criteria and third parties authorized to check the compliance of the securitization with the STS criteria. Under the STS Regulation, originators and sponsors will be required to notify the European Securities and Markets Authority of any securitization that meets the STS criteria and ESMA will maintain a list of all such securitizations on its website. The draft guidelines are interlinked with the ESMA Regulatory Technical Standards and Implementing Technical Standards on STS notifications. The EBA guidelines provide guidance on the content of the STS requirements, while the ESMA RTS/ITS specify the format of notification of compliance with the STS requirements. ESMA's draft RTS/ITS are expected to be finalized by July 2018.

Comments on the draft guidelines are invited by July 20, 2018. Once finalized, they will be translated into the official EU languages and published on the EBA website.

View the draft guidelines on STS criteria for ABCP securitization.

View the draft guidelines on STS criteria for non-ABCP securitization.

View details of ESMA's developing ITS/RTS for STS notifications.