December 12, 2018

EBA published the final guidelines that provide a harmonized interpretation of the criteria for a securitization to be eligible as simple, transparent, and standardized (STS) on a cross-sectoral basis throughout EU. These guidelines will play a crucial role in the new EU securitization framework that becomes applicable on January 01, 2019, by providing a single point of consistent interpretation of the STS criteria for all entities involved in the STS securitization, including originators, sponsors, investors, competent authorities, and third party STS verifiers. These guidelines apply from May 15, 2018.

The guidelines, which were developed for both non asset-backed commercial paper (ABCP) and ABCP securitizations, clarify and ensure a common understanding of all the STS criteria, including those related to the expertise of the originator and servicer, the underwriting of standards, exposures in default and credit impaired debtors, and predominant reliance on the sale of assets. The guidelines will be applied on a cross-sectoral basis throughout EU with the aim to facilitate the adoption of the STS criteria, which is one of prerequisites for the application of a more risk-sensitive regulatory treatment under the new EU securitization framework.

The guidelines on STS criteria for ABCP securitizations apply in relation to the transaction- and program-level requirements of ABCP securitizations. Both these sets of guidelines are an important building block in a set of initiatives that aim to destigmatize and revive a sound securitization market in the EU and to facilitate further lending to the real economy in line with the objectives of the Capital Markets Union.

 

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Keywords: Europe, EU, Banking, Securities, Securitization Framework, Securitization Regulation, STS Securitization, EBA

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