ECB Decision on Transparency Requirements of Securitization Regulation
ECB has decided that the loan-level data reporting requirements of the Eurosystem collateral framework will converge toward the disclosure requirements and registration process for securitization repositories specified in the Securitization Regulation (EU Regulation No 2017/2402). This decision is intended to promote efficiency and standardization in the securitization market. Phasing-in of the new loan-level data requirements will be gradual and will facilitate continued eligibility of transactions fulfilling the current reporting standards.
The disclosure requirements of the Securitization Regulation will be reflected in the eligibility requirements for the acceptance of asset-backed securities (ABSs) as collateral in the liquidity-providing operations of the Eurosystem. In addition, ECB will phase out its designation process for loan-level data repositories and will rely instead on the registration of securitization repositories by ESMA under the Securitization Regulation. Eligibility criteria for ABSs will change at a future date, dependent on fulfillment of certain conditions.
The Securitization Regulation sets out the rules for all securitization transactions and creates a framework for simple, transparent, and standardized securitization. It will enhance harmonization and transparency in the securitization market and strengthen the efforts, initiated in 2013 with the establishment of the ECB’s loan-level data initiative, to support a higher degree of transparency in the asset-backed securities (ABS) market. The Securitization Regulation became applicable on January 01, 2019. ABSs issued after that date and older ABSs seeking to obtain the simple, transparent and standardized, or STS, label, as defined in Chapter 4 of the Regulation, will be subject to its provisions.
However, the change in the Eurosystem’s loan-level data reporting requirements to reflect the Securitization Regulation’s disclosure requirements and registration process for securitization repositories is dependent on two conditions being met. First, the underlying exposure templates specified in the implementation technical standards adopted by EC under Article 7(4) of the Securitization Regulation must have entered into force. Second, at least one securitization repository must have been registered by ESMA. The change in the transparency requirements of the Eurosystem will come into effect after a transitional period of three months from the date on which these two conditions are fulfilled. For ABSs issued prior to January 01, 2019 which are not subject to the Regulation, the current loan-level data reporting requirements of the Eurosystem will be maintained for a grandfathering period of three years after the date on which the change in the transparency requirements of ECB becomes effective. After that period, it is envisaged that the disclosure requirements of the Securitization Regulation will apply in full to these ABSs.
Related Link: Press Release
Keywords: Europe, EU, Banking, Securities, Reporting, Loan-Level Data, Securitization Regulation, STS Securitization, Asset Backed Securities, ECB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Scott Dietz
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Previous Article
FED Announces Conclusion of Efforts of Payments Security Task ForceRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
