ECB Issues Opinion on Draft of a Securitization Framework in Cyprus
ECB issued an opinion on the draft law on securitization framework in Cyprus. The opinion focuses on specific aspects of the newly established securitization framework and on the new tasks conferred on the Central Bank of Cyprus (CBC) in the context of the prohibition of monetary financing.
The purpose of the draft law is to establish a framework for securitizations in Cyprus to facilitate the secondary market for loans, which may in turn support the reduction of the high level of nonperforming loans (NPLs) of Cypriot banks. The draft law vests in CBC the power to regulate and supervise securitizations to safeguard the proper functioning of the securitization market in Cyprus. The draft law also establishes the procedure that an originator would need to follow to notify CBC that it intends to carry out a securitization. The draft law provides that a securitization special purpose entity (SSPE) set up by an originator may not commence its activities as a securitization vehicle, unless the originator has notified CBC in writing of its intention to carry out one or more securitization transactions and has furnished CBC with the necessary information required under the draft law.
ECB, in its opinion, welcomed the establishment of the framework for securitization in Cyprus, as it may enable the efficient transfer of NPLs off the balance sheet of credit institutions. In addition, by granting the regulatory and supervisory authority to CBC over the securitization activity of originators, servicers, and SSPEs, the draft law intends to ensure that this activity is properly carried out and, more generally, to safeguard the proper functioning of the securitization market in Cyprus. ECB also asked for certain clarifications and modifications to be incorporated into the draft law. For instance, ECB noted the provisions of the draft law requiring originators to notify securitizations to CBC. ECB states that it would be worth clarifying whether the notification obligation would be equally applicable in cases where the SSPE has been set up by a person other than the originator, which intends to carry out securitization.
ECB, on January 03, 2018, had received a request from the Ministry of Finance of Cyprus for an opinion on a draft securitization law. On February 22, 2018, the Ministry of Finance submitted a new request for an opinion on a revised version of the draft law. The competence of ECB to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the EU and the third and sixth indents of Article 2(1) of Council Decision 98/415/EC1 , as the draft law relates to the CBC and to rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the ECB, the Governing Council has adopted this opinion.
Related Link: ECB Opinion (PDF)
Keywords: Europe, EU, Cyprus, Banking, Securitization Framework, Opinion, Draft Law, ECB
Previous Article
EBA Issues Updated Risk Dashboard for Fourth Quarter of 2017Related Articles
|
News
ECB Updates Validation Checks and List of Identifiers Under AnaCreditECB updated the AnaCredit validation checks (Version 1.4) and the list of national identifiers (version 2.4) for AnaCredit reporting.
March 21, 2019
WebPage
Regulatory News
|
|
News
HKMA Publishes CoP on Loss-Absorbing Capacity Requirements of BanksHKMA issued, in relation to the Financial Institutions Resolution (Loss-Absorbing Capacity Requirements—Banking Sector) Rules (LAC Rules) a chapter of a code of practice (LAC CoP) under section 196 of the Financial Institutions Resolution Ordinance (FIRO).
March 20, 2019
WebPage
Regulatory News
|
|
News
BCBS Publishes Results of the Basel III Monitoring ExerciseBCBS published results of the Basel III monitoring exercise based on data as of June 30, 2018.
March 20, 2019
WebPage
Regulatory News
|
|
News
EBA, FCA, and PRA Agree on MoU Template for Supervisory CooperationEBA, FCA, and PRA announced that they have agreed on a template for the Memorandum of Understanding (MoU) that sets out the expectations for supervisory cooperation and information-sharing arrangements between UK and EU/European Economic Area national authorities.
March 20, 2019
WebPage
Regulatory News
|
|
News
EBA Publishes Reports Monitoring the Implementation of Basel III in EUEBA published two reports measuring the impact of implementing the final Basel III reforms and monitoring the implementation of liquidity measures in EU.
March 20, 2019
WebPage
Regulatory News
|
|
News
BCBS Publishes Results of Survey on Proportionality in Bank RegulationBCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.
March 19, 2019
WebPage
Regulatory News
|
|
News
US Agencies Adopt Interim Rule to Facilitate Transfers of Legacy SwapsUS Agencies (FCA, FDIC, FED, FHFA, and OCC) are adopting and inviting comments on an interim final rule.
March 19, 2019
WebPage
Regulatory News
|
|
News
HKMA Expects Banks to Manage Risks Related to Crypto-Asset ExposuresHKMA issued a statement announcing that it expects authorized institutions to take note of the BCBS statement on crypto-assets and its prudential expectations.
March 18, 2019
WebPage
Regulatory News
|
|
News
SNB Issues Form on Solvency Risk of Counterparties in Interbank SectorSNB released form (Version 5.00) and related documentation for reporting solvency risk of counterparties in the interbank sector.
March 18, 2019
WebPage
Regulatory News
|
|
News
EIOPA Requests Data on LTG Measures from Insurers Under Solvency IIEIOPA has requested the European Economic Area insurance undertakings, which are subject to Solvency II, to provide information on the long-term guarantee (LTG) measures.
March 18, 2019
WebPage
Regulatory News
|
