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
APRA Releases Minor Changes to Reporting Standards on SA-CCR for BanksAPRA released minor changes to the three reporting standards for the standardized approach for measuring counterparty credit risk exposures (SA-CCR).
May 22, 2019
WebPage
Regulatory News
|
|
News
APRA Proposes to Amend Guidance on Residential Mortgage LendingAPRA is consulting on revisions to the prudential practice guide APG 223 on residential mortgage lending in Australia.
May 21, 2019
WebPage
Regulatory News
|
|
News
ESAs Amend Technical Standards on Mapping of ECAIs Under CRRESAs published a second amendment to the implementing technical standards on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk under the Capital Requirements Regulation (CRR).
May 20, 2019
WebPage
Regulatory News
|
|
News
OCC Consults on Information Collection for Home Mortgage DisclosuresOCC is soliciting comment on the revision of the information collection titled “Regulation C—Home Mortgage Disclosure.” OCC also notes that it has sent the collection to OMB for review.
May 20, 2019
WebPage
Regulatory News
|
|
News
EIOPA Updates Q&A on Regulations in May 2019EIOPA published additional questions and answers (Q&A) on guidelines, directives, and regulations applicable to insurers in Europe.
May 17, 2019
WebPage
Regulatory News
|
|
News
FSB Publishes Update on Meeting of RCG for AmericasFSB published a summary of the meeting of its Regional Consultative Group (RCG) in Americas.
May 17, 2019
WebPage
Regulatory News
|
|
News
ESRB Paper on Impact of Business Model Similarities on Risk CaptureESRB published a working paper on whether information contagion and business model similarities explain bank credit risk commonalities.
May 17, 2019
WebPage
Regulatory News
|
|
News
IASB Issues Work Plan and Meeting Updates for May 2019IASB published an updated work plan, along with the update of its meeting in May 2019.
May 17, 2019
WebPage
Regulatory News
|
|
News
FCA Publishes Its Business Plan for the Coming YearFCA published its Business Plan, which sets out the main areas of focus and priorities for 2019/20.
May 17, 2019
WebPage
Regulatory News
|
|
News
CBM Notifies ESRB and ECB on Imposing Borrower-Based Measures in MaltaCBM notified ESRB and ECB regarding its decision to impose borrower-based measures on lenders in Malta.
May 17, 2019
WebPage
Regulatory News
|
