June 09, 2019

G20 published an official statement, also known as Communiqué, summarizing developments at the June meeting of the finance ministers and central bank governors in Fukuoka, Japan. G20 welcomed the work done by international bodies in the areas of cyber security, crypto-asset regulation, market fragmentation, correspondent banking, financial inclusion, sustainable finance, and assessment of the impact of regulatory reforms on SME financing.

  • The information to be provided by a third party seeking authorization to assess the compliance of securitizations with the STS criteria provided for in Securitization Regulation should enable a competent authority to evaluate whether and, to what extent, the applicant meets the conditions of Article 28(1) of the Securitization Regulation. An authorized third party will be able to provide STS assessment services across EU. The application for authorization should, therefore, comprehensively identify that third party, any group to which this third party belongs, and the scope of its activities. With regard to the STS assessment services to be provided, the application should include the envisaged scope of the services to be provided as well as their geographical scope, particularly the following:

    • To facilitate effective use of the authorization resources of a competent authority, each application for authorization should include a table clearly identifying each submitted document and its relevance to the conditions that must be met for authorization.
    • To enable the competent authority to assess whether the fees charged by the third party are non-discriminatory and are sufficient and appropriate to cover the costs for the provision of the STS assessment services, as required by Article 28(1)(a) of Securitization Regulation, the third party should provide comprehensive information on pricing policies, pricing criteria, fee structures, and fee schedules.
    • To enable the competent authority to assess whether the third party is able to ensure the integrity and independence of the STS assessment process, that third party should provide information on the structure of those internal controls. Furthermore, the third party should provide comprehensive information on the composition of the management body and on the qualifications and repute of each of its members.
    • To enable the competent authority to assess whether the third party has sufficient operational safeguards and internal processes to assess STS compliance, the third party should provide information on its procedures relating to the required qualification of its staff. The third party should also demonstrate that its STS assessment methodology is sensitive to the type of securitization and that specifies separate procedures and safeguards for asset-backed commercial paper (ABCP) transactions/programs and non-ABCP securitizations.

    The use of outsourcing arrangements and a reliance on the use of external experts can raise concerns about the robustness of operational safeguards and internal processes. The application should, therefore, contain specific information about the nature and scope of any such outsourcing arrangements or use of external experts as well as the third party's governance over those arrangements. Regulation (EU) 2019/885 is based on the draft regulatory technical standards submitted by ESMA to EC.

     

    Related Links

    Effective Date: June 18, 2019

    Press Release
  • Proposed Rule 1
  • Proposed Rule 2
  • Proposed Rule 3
  • Presentation on Regulatory Framework (PDF)
  • Presentation on Resolution Plan Rules (PDF)
  • The G20 leaders reaffirmed that they will continue to take joint action to strengthen international cooperation and frameworks. As per the statement, G20 remains committed to the full, timely, and consistent implementation of the agreed financial reforms. It will continue to evaluate the effects of these reforms and welcomes FSB's public consultation report on SME financing. G20 will continue to monitor and, as necessary, address vulnerabilities and emerging risks to financial stability, including with macro-prudential tools. While non-bank financing provides welcome diversity to the financial system, G20 will continue to identify, monitor, and address the related financial stability risks as appropriate. G20 also welcomed the reports from FSB and IOSCO on market fragmentation and looks forward to receiving progress updates in October, including on ongoing work. G20 committed to addressing the unintended, negative effects of market fragmentation, including through regulatory and supervisory cooperation. G20 will also continue to monitor and address the causes and consequences of the withdrawal of correspondent banking relationships and issues on remittance firms’ access to banking services.

    The Communiqué states that G20 welcomed private-sector participation and transparency in the areas of sustainable finance and financial inclusion while reaffirming its commitment to applying the recently amended FATF standards to virtual assets and related providers for anti-money laundering (AML) and countering the financing of terrorism (CFT). It looks forward to the adoption of the FATF Interpretive Note and Guidance by the FATF at its plenary later this month. The IOSCO work on crypto-asset trading platforms related to consumer and investor protection and market integrity was also welcomed, along with the FSB work in this area. Recently, FSB has published a directory of crypto-asset regulators and a report on work underway, regulatory approaches, and potential gaps relating to crypto-assets. Also welcomed was the FSB report on decentralized financial technologies and their possible implications for financial stability, regulation, and governance, with focus on how regulators can enhance the dialog with a wider group of stakeholders. Finally, the Communiqué states that G20 will continue to step up efforts to enhance cyber resilience and welcomed progress on the FSB initiative to identify effective practices for response to and recovery from cyber incidents.

     

    Related Link: G20 Communiqué

     

    Keywords: International, Banking, Crypto-Assets, Financial Stability, Cyber Risk, SME Financing, Sustainable Finance, G20

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