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.
Keywords: Europe, EU, UK, Banking, Insurance, Securities, Brexit Transition, STS Securitization, Securitization Framework, ABCP Securitization, ESAs
Previous ArticleEBA Revises List of Deactivated Validation Rules for Bank Reporting
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).