HM Treasury, or HMT, published responses to the consultation on implementation of investment firms and Basel III regimes as well as a call for evidence with a view to updating the Securitization Regulation. HM Treasury is requesting feedback on regulatory aspects such Securitization Regulation effects, risk retention modalities, disclosures related to private securitizations, simple, transparent, and standardized securitizations (STS) equivalence regime, environmental, social, and governance (ESG) disclosures, third-party verification regime, and limited-license banks. The feedback period for this call for evidence ends on September 02, 2021.
Article 46 of the Securitization Regulation places a legal obligation on HM Treasury to review functioning of the Securitization Regulation and lay a report in Parliament by January 01, 2022. This call for evidence covers the following key areas that HM Treasury must assess in this review obligation:
- Effects of the Securitization Regulation. HM Treasury seeks responses on the effects of Securitization Regulation on the functioning of the securitization market, the contribution of securitization to the real economy (in particular on access to credit for Small and Medium-sized Enterprises and investments), and the interconnectedness between financial institutions and stability of the financial sector.
- Risk retention modalities. HM Treasury invites responses on certain questions to support it in ascertaining whether the risk retention modalities remain appropriate and related to the ongoing PRA consultation on the securitization of nonperforming loans.
- Disclosures related to private securitizations. HM Treasury would like to understand the drivers for increase in private securitizations, including the UK transactions listed outside the UK, and the consequences for the access by, and level of information disclosed to, investors.
- STS equivalence regime. HM Treasury seeks to understand views on the merits and risks of introducing an STS equivalence regime in the UK, on the potential considerations that HM Treasury must assess before making any equivalence determination, and on the features of any potential adaptation periods.
- ESG disclosures. HM Treasury would like to understand what underlying exposures the disclosure requirements for STS securitizations could usefully be expanded to and with what information and invites respondents’ views on broader ESG disclosures. HM Treasury also invites responses on how the Securitization Regulation can support the green finance objectives of the government in the near-term.
- The third-party verification regime. HM Treasury is required to assess the appropriateness of the third-party verification regime, whether the authorization regime for third parties fosters sufficient competition among third parties, and whether changes in the supervisory framework need to be introduced to ensure financial stability.
- Limited licensed banks. In this regard, HM Treasury is required to assess whether there is a need to complement the framework on securitization set out in Securitization Regulation by establishing a system of limited licensed banks, performing the functions of the Securitization Special Purpose Entity or SSPE, and having the exclusive right to purchase exposures from originators and sell claims backed by the purchased exposures to investors
The aim of the review of the Securitization Regulation includes supporting and developing securitization markets in the UK, including through the increased issuance of STS securitizations. This review is separate from the other securitization initiatives, including an ongoing PRA consultation on the securitization of nonperforming loans.
HM Treasury has also published responses to consultation on implementation of the Investment Firms Prudential Regime, or IFPR, and Basel III standards. The government received 12 responses to the consultation, which took place from February 04, 2021 to April 01, 2021. The government is changing its approach to implementation of some areas of Basel III standards, as explained in the response to consultation document. The UK government, FCA, and PRA announced their intention to target an implementation date of January 01, 2022 for the new Investment Firms Prudential Regime and the outstanding Basel III standards. The government intends to set out the relevant implementing secondary legislation on a timeline that provides institutions with adequate time to prepare ahead of the January 01, 2022 implementation date.
- Notification on Call for Evidence
- Call for Evidence (PDF)
- Notification on Response to Consultation
- Responses to Consultation (PDF)
Comment Due Date: September 02, 2021
Keywords: Europe, UK, Banking, Securities, Securitization Framework, ESG, Disclosures, Equivalence Regime, Investment Firms, IFPR, Basel, NPLs, Responses to Consultation, PRA, FCA, HM Treasury
Previous ArticleFED Issues Report on Results of 2021 Stress Tests for Banks
The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA
The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.
The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.
The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.
In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.
The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.
The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).
EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.