ESAs Clarify Impact on Status of STS Securitizations Post Brexit
ESAs (EBA, EIOPA, and ESMA) issued a statement that highlights the impact in the change of status of simple, transparent, and standardized (STS) securitization transactions after the end of the Brexit transition period on December 31, 2020. For a securitization transaction to qualify as an STS securitization, the Securitization Regulation (2017/2402) requires that the originator, sponsor, and the securitization special purpose vehicle (SSPE) be established in EU. Therefore, the securitization transactions labeled as “STS securitizations” will lose the STS status in EU in case one or all the securitization parties (originator, sponsor, SSPE) are established in the UK after the end of the transition period for Brexit. This will apply to STS asset-backed commercial paper (ABCP) securitizations and STS non-ABCP securitizations.
ESMA is working with national competent authorities to ensure that the STS securitization public register of ESMA is up to date on January 01, 2021. The loss of STS status implies that the preferential capital treatment available for investments in this type of securitizations will come to an end. This will affect the institutional investors in EU, such as credit institutions and insurance entities, that hold positions in STS securitizations where the originator, sponsor, and/or SSPE are established in the UK. ESAs, therefore, advise these investors to assess the impact of this change of status on their balance sheet and investments ahead of December 31, 2020.
Related Links
Keywords: Europe, EU, UK, Banking, Insurance, Securities, Brexit Transition, STS Securitization, Securitization Framework, ABCP Securitization, ESAs
Previous Article
EBA Revises List of Deactivated Validation Rules for Bank ReportingRelated Articles
BIS Innovation Hub Sets Out Work Program for 2021
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
EC Plans to Consult on Crisis Management and EDIS Framework Revisions
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA Finalizes Remuneration Standards for Investment Firms in EU
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
ECA Recommends Actions to Enhance Resolution Planning for Banks
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA Proposes Rules on Identity Verification of Depositor Protection
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB Publishes Work Program for 2021
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA Issues Update on Move to New Data Collection Platform
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank Publishes Derivation Rules for Reporting by Banks
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED Revises Capital Planning and Stress Testing Requirements for Banks
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
