ESAs Issue Q&A and Opinion on Provisions of Securitization Regulation
ESAs jointly published a set of questions and answers (Q&A) on cross-sectoral aspects of the Securitization Regulation. The Q&A clarify the content and format of the information of a securitization transaction that should be disclosed by the originator, sponsor, and special purpose entity issuer. The Q&A also clarify the transaction documentation of a Simple, Transparent, and Standardized (STS) securitization that should be made publicly available to facilitate investor compliance with its due diligence requirements as well as the type of STS certification services that can be provided by Third Party Verifiers to the securitization parties. Another joint publication from ESAs sets out an opinion on the jurisdictional scope of the obligations of the non-EU parties (or third-country parties) to securitizations under the Securitization Regulation.
The joint opinion on jurisdictional scope is intended to facilitate the understanding of certain provisions of the Securitization Regulation in cases where third-country entities become parties to a securitization and is intended to help improve the functioning of securitization markets in EU. The opinion clarifies the potential obligations of such third-country parties as well as related compliance aspects of a transaction under the Securitization Regulation. In this opinion, ESAs set out their common view on the practical difficulties faced by market participants in connection with the jurisdictional scope of application of various provisions in the Securitization Regulation in the following scenarios:
- Securitizations where some, but not all, of their sell-side parties—including originator, original lender, sponsor, and special purpose entity issuer—are located in a third country
- Securitizations where all sell-side parties are located in a third-country and EU investors invest in them
- Investments in securitizations by subsidiaries of EU regulated groups, where those subsidiaries are located in a third country
- Securitizations where one of the parties is a third-country investment fund manager
The joint opinion recommends that these difficulties should be addressed, where possible, through interpretative guidance from EC. ESAs also invite EC to undertake a comprehensive review of the jurisdictional scope framework of the Securitization Regulation as part of the upcoming overall reform of this Regulation, as a means of thoroughly addressing market participants’ concerns regarding proper market functioning.
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Keywords: Europe, EU, Banking, Insurance, Q&A, Securitization Regulation, STS Securitization, Jurisdictional Scope, Third-Country Parties, Opinion, EC, ESAs
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