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
Previous ArticleFASB Publishes Summary of Tentative Board Decisions at June Meeting
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The Australian Prudential Regulation Authority (APRA) is seeking comments, until October 21, 2022, on the introduction of CPS 230, which is the new cross-industry prudential standard on operational risk management.
The European Commission published a Delegated Regulation 2022/1301 on the information to be provided in accordance with the simple, transparent, and standardized (STS) notification requirements for on-balance-sheet synthetic securitizations.
The Australian Prudential Regulation Authority (APRA) is announced revisions to the capital framework for authorized deposit-taking institutions to implement the "unquestionably strong" capital ratios and the Basel III reforms.
The European Banking Authority (EBA) published a report that examines the use of certain exemptions included in the large exposures regime under the Capital Requirements Regulation (CRR).
The Bank of England (BoE), the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA) published a joint discussion paper that sets out potential measures to oversee and strengthen the resilience of services provided by critical third parties to the financial sector in UK.
The Bank of England (BoE) issued a communication to firms to provide an update on the progress of the joint data transformation program—which is being led by BoE, the Financial Conduct Authority (FCA), and the industry—for the financial sector in UK.
The European Banking Authority (EBA) published the draft methodology, templates, and template guidance for the European Union-wide stress test in 2023.
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) jointly published the final guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) for investment firms.