PRA published the policy statement PS29/18, which provides feedback to responses to the consultation paper CP12/18 on the new EU framework and significant risk transfer for securitization. The recent updates also include the final policy of PRA in the form of SS10/18 on general requirements and capital framework for securitization (Appendix 1); updated SS9/13 significant risk transfer in related in to securitization (Appendix 2); and updated SS31/15 on the Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process, or SREP (Appendix 3).
The date of application for the new securitization legislative framework is January 01, 2019. SS10/18 and amendments to SS31/15 also become effective from January 01, 2019. The updated policies amending SS9/13 apply immediately to all PRA authorized Capital Requirements Directive (CRD IV) firms after the publication of PS29/18. PRA has published both the current and future versions of these supervisory statements. Different parts of the PS20/18 are relevant to different firms, depending on whether the policy relates to the implementation of the EU Securitization Regulation, revisions to the banking securitization capital framework, or Significant Risk Transfer securitization. Policy relating to the implementation of the Securitization Regulation will be relevant to all PRA-authorized CRD IV firms and all PRA-authorized Solvency II firms (and potentially other firms pending HM Treasury discretions). Policy relating to the revision to the banking securitization capital framework and Significant Risk Transfer securitization will be relevant to PRA-authorized CRD IV firms only.
SS10/18 is relevant to PRA-authorized CRD IV firms and PRA-authorized Solvency II firms to which the Securitization Regulation applies, unless stated otherwise. This includes PRA-authorized UK banks, building societies, PRA-designated UK investment firms, UK insurance firms, UK reinsurance firms, and UK insurance special purpose vehicles (ISPVs). SS10/18 sets out the PRA expectations of firms in respect of securitization in the following chapters:
- General requirements under the Securitization Regulation (Chapter 2)—general expectations of firms and processes under Chapter 2 of the Securitization Regulation
- STS ABCP Sponsors (Chapter 3)—general expectations of firms seeking to become sponsors of Simple, Transparent, and Standardized (STS) Asset-Backed Commercial Paper (ABCP) programs
- Capital Requirements Regulation (CRR) securitization capital framework (Chapter 4)—PRA expectations and approach regarding the securitization capital framework for firms to which Directive 2013/36/EU (CRD) applies.
Effective Date: January 01, 2019
Keywords: Europe, EU, UK, Banking, Insurance, Securitization Regulation, CRD IV, Solvency II, Significant Risk Transfer, Basel III, PS29/18, PRA
Previous ArticleEIOPA Publishes Q&A on Regulations in December 2018
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.