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 ArticleEBA Single Rulebook Q&A: Fourth Update for March 2019
CBUAE has issued a regulation that introduces the licensing and supervision framework for low-risk, specialized banks.
APRA is consulting on CPG 511—the draft Prudential Practice Guide on remuneration for banks, insurers, and superannuation licensees—with the comment period ending on July 23, 2021.
MAS announced a new RegTech grant scheme and an enhancement of the Digital Acceleration Grant (DAG) scheme to accelerate technology adoption in the financial sector.
PRA published a letter that sets out findings from the 2020 Internal Audit Review of the Collections function of a sample of non-systemic banks and building societies.
EIOPA launched a consultation on the Interbank Offered Rate (IBOR) transitions, in context of the EU Benchmarks Regulation.
EIOPA published a discussion paper on uses cases of, and the European approach to, blockchain and smart contracts in the insurance sector.
HKMA granted a banking license to NongHyup Bank (also NH Bank), which is incorporated in the Republic of Korea.
PRA published a discussion paper that explores options for developing a simpler but resilient prudential framework for banks and building societies that are neither systemically important nor internationally active.
ECB published an opinion on the proposal for a regulation on the pilot regime for market infrastructures based on distributed ledger technology.
EBA proposed regulatory technical standards that specify how to identify the appropriate risk-weights and conditions when assessing minimum loss given default (LGD) values for exposures secured by immovable property.