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August 22, 2018

ESMA issued, and submitted to EC for endorsement, a set of draft regulatory and implementing technical standards under the Securitization Regulation. These standards concern the details of a securitization to be made available by the originator, sponsor, and Securitization Special Purpose Entity (SSPE), in addition to the format and templates for make the information available. The XML schema for the templates shall be made available in the coming months.

These technical standards contain detailed arrangements to implement the new European regulatory framework for securitizations, which is intended to promote simple, transparent and standardized (STS) securitizations. The draft implementing technical standards specify the format and templates that are expected to be used by originators, sponsors, and SSPEs for making this information available. The draft regulatory technical standards distinguish between non-Asset Backed Commercial Paper (ABCP) securitization and ABCP securitization. In line with ESMA’s legal mandates under the different related articles of the Securitization Regulation, the regulatory standards also distinguish between all securitizations and those securitizations that are required to make information available via a securitization repository. The draft regulatory technical standards specify information to be provided regarding:

  • The underlying exposures—that is, the loans, leases, and other receivables required to be made available according to the Regulation. Specific templates have been developed according to the type of securitization and underlying exposure, to reflect the specific features of relevance for investors, potential investors, and public authorities to meet their obligations.
  • Investor report information, including details on the credit quality and performance of underlying exposures, on events that trigger changes in the priority of payments or the replacement of any counterparties, and, where applicable, given the type of securitization, on the cash flows.
  • Any inside information on insider dealing and market manipulation related to the securitization that is obliged to be made public in accordance with Article 17 of Regulation (EU) No 596/2014.
  • Information on significant events affecting the securitization, including material changes in its structural features, changes to its risk characteristics and, for STS securitizations, where the securitization ceases to meet the STS requirements or where competent authorities have taken remedial or administrative sanctions.

As set out in its letter to EC on April 24, 2018, ESMA has taken note of significant concerns from market participants regarding the transitional provisions of the Securitization Regulation. ESMA is receptive to these understandable concerns from stakeholders and, consequently, has re-organized its resources to prioritize the delivery of these items well ahead of the formal deadline of January 19, 2019. ESMA hopes that this will allow the templates to be adopted as soon as possible and, thus, ensure that market participants have sufficient time to understand these requirements and to adapt their reporting systems with minimal disruption.

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Keywords: Europe, EU, Banking, Securities, Securitization Regulation, STS Securitization, Disclosures, RTS/ITS, ESMA

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