General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
December 28, 2017

EC published EU Regulation 2017/2402, which lays down a general framework for securitization and creates a specific framework for simple, transparent, and standardized (STS) securitization. This Regulation amends Directives 2009/65/EC, 2009/138/EC, and 2011/61/EU, in addition to Regulations (EC) No 1060/2009 and (EU) No 648/2012. This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply from January 01, 2019.

This Regulation applies to institutional investors and to originators, sponsors, original lenders, and securitization special purpose entities (SSPEs). This Regulation only allows for "true-sale" securitizations to be designated as STS. In a true-sale securitization, the ownership of the underlying exposures is transferred or effectively assigned to an issuer entity, which is a SSPE. This Regulation introduces a ban on resecuritization, subject to derogations for certain cases of resecuritizations that are used for legitimate purposes and to clarifications as to whether asset-backed commercial paper (ABCP) programs are considered to be resecuritizations. Resecuritizations should only be permitted in specific instances as established by this Regulation. A more risk-sensitive prudential framework for STS securitizations is important to ensure that EU functions as a single market for STS securitizations and that it facilitates cross-border transactions. The development of STS securitization market also constitutes a building block of the Capital Markets Union.

The Regulation stipulates that, where a securitization no longer meets the STS requirements, the originator and sponsor should immediately notify ESMA and the relevant competent authority. Moreover, where a competent authority has imposed administrative sanctions with regard to a securitization notified as being STS, that competent authority should immediately notify ESMA for their inclusion on the STS notifications list allowing investors to be informed about such sanctions and about the reliability of STS notifications. The requirements for using the "STS" designation are new and will be further specified by EBA guidelines and supervisory practice over time. This Regulation should apply to securitizations, the securities of which are issued on or after January 01, 2019. For securitization positions outstanding as of January 01, 2019, originators, sponsors, and SSPEs should be able to use the designation "STS" provided that the securitization complies with the STS requirements, for certain requirements at the time of notification and for other requirements at the time of origination.


Related Link: EU Securitization Regulation

Effective Date: January 17, 2018

Keywords: Europe, EU, Banking, Securities, STS Securitization, Securitization Framework, Regulation 2017/2402, EC

Related Insights

APRA Authorizes New Restricted Authorized Deposit Taking Institution

APRA announced that it has authorized Xinja Bank Limited as a restricted authorized deposit-taking institution (Restricted ADI) under the Banking Act 1959.

December 18, 2018 WebPage Regulatory News

US Agencies Propose Derivative Counterparty Credit Exposure Framework

US Agencies (OCC, FED, and FDIC) proposed to implement a new approach for calculating the exposure amount of derivative contracts under the regulatory capital rule.

December 17, 2018 WebPage Regulatory News

HKMA Announces Intention to Consult on Updated BCBS Disclosure Rules

HKMA announced that it will consult the industry in due course on the relevant implementation proposal to give effect to the disclosure requirements of the December 2018 package by BCBS.

December 17, 2018 WebPage Regulatory News

EBA Finalizes Guidelines on Disclosure of Non-Performing Exposures

EBA published the final guidelines on disclosure of non-performing and forborne exposures.

December 17, 2018 WebPage Regulatory News

HKMA Issues and Revises Reporting Forms Under the IRRBB Framework

HKMA issued a revised version of the Supervisory Policy Manual (SPM) IR-1, with an updated title “Interest Rate Risk in the Banking Book” (IRRBB).

December 14, 2018 WebPage Regulatory News

EBA Single Rulebook Q&A: Second Update for December 2018

EBA published answers to six questions under the Single Rulebook question and answer (Q&A) updates for this week.

December 14, 2018 WebPage Regulatory News

EIOPA Publishes Results of the 2018 Insurance Stress Test

EIOPA published the results of its 2018 and fourth stress test for the insurance sector in EU.

December 14, 2018 WebPage Regulatory News

OSFI Proposes Changes to Guideline on Large Exposure Limits

OSFI proposed revisions to the Guideline B-2 on Large Exposure Limits, for implementation in the first quarter of 2020.

December 13, 2018 WebPage Regulatory News

BCBS Consults on Disclosure Rules for Leverage Ratio Window-Dressing

BCBS published a consultative document on revisions to the leverage ratio disclosure requirements to address the leverage ratio window-dressing behavior.

December 13, 2018 WebPage Regulatory News

PRA Updates the Policy on Approach to Systemic Risk Buffer

PRA published the final Statement of Policy on the PRA approach to the implementation of the systemic risk buffer (SRB), as proposed in the consultation paper CP29/18.

December 13, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2344