Featured Product

    ESAs Clarify Securitization Disclosure Requirements for Institutions

    November 30, 2018

    ESAs (EBA, EIOPA, and ESMA) published a statement in response to the industry concerns about severe operational challenges in meeting the transitional provisions of the Securitization Regulation disclosure requirements. The statement also addressed concerns about complying with the EU requirements on risk retention, transparency, re-securitization, and criteria for credit-granting obligations on a consolidated basis by EU credit institutions engaged in local securitization activities in third countries.

    The Securitization Regulation (EU Regulation 2017/2402) enters into force on January 01, 2019. The regulation contains a set of high-level transparency requirements, which must be met by reporting entities (that is, the entity designated among the securitization originator, sponsor, and Securitization Special Purpose Entity to fulfill these requirements). The details and standardized templates to be used to fulfill these requirements will be further specified in a Commission Delegated Regulation using as a basis a set of draft regulatory and implementing technical standards developed by ESMA (the ESMA disclosure templates). ESMA and EC are considering how to address market concerns raised about some aspects of the ESMA disclosure templates. These templates are, therefore, unlikely to be adopted by January 01, 2019; therefore, the Securitization Regulation transitional provisions will apply. The transitional provisions require that the CRA3 templates (templates under the Credit Rating Agencies Regulation) be used until the ESMA disclosure templates are adopted. 

    However, the reporting entities may need to make substantial and costly adjustments to their reporting systems to comply with the CRA3 templates on a temporary basis, until the ESMA disclosure templates enter into application. Therefore, ESAs expect competent authorities to generally apply their supervisory powers in their day-to-day supervision and enforcement of applicable legislation in a proportionate and risk-based manner. This approach entails that competent authorities can, when examining reporting entities’ compliance with the disclosure requirements of the Securitization Regulation, take into account the type and extent of information already being disclosed by reporting entities. This approach entails a case-by-case assessment, by the competent authorities, of the degree of compliance with the Securitization Regulation. The ESAs and competent authorities expect that these difficulties will be solved with the subsequent adoption of the ESMA disclosure templates and, thus, the expiry of the transitional arrangements involving the CRA3 templates in the Securitization Regulation.

    Moreover, the EU banking entities are facing challenges with regard to complying with specific provisions of the CRR Amending Regulation relating to the scope of the Chapter 2 (due-diligence, risk retention, transparency, resecuritization and criteria for credit-granting) requirements in the Securitization Regulation. ESAs and competent authorities expect that these difficulties will be solved with the adoption of the new Capital Requirements Amending Regulation (CRR 2) under which the scope of Article 14 of the CRR is expected to be reduced and references to Chapter 2 will be replaced with reference to Article 5 (due-diligence requirements) only.

     

    Related Links

    Keywords: Europe, EU, Banking, Securitization Regulation, CRA Regulation, Disclosures, Reporting, Transitional Provisions, CRR 2, ESAs

    Featured Experts
    Related Articles
    News

    ECB Finalizes Methodology to Assess CCR and A-CVA Risk of Banks

    ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.

    September 18, 2020 WebPage Regulatory News
    News

    EBA Provides Opinion on Definition of Credit Institution in CRR

    EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).

    September 18, 2020 WebPage Regulatory News
    News

    APRA Consults on Alignment of Daily Liquidity Report for Banks

    APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.

    September 17, 2020 WebPage Regulatory News
    News

    FED Releases Scenarios for Second Round of Stress Tests on Banks

    FED released hypothetical scenarios for a second round of stress tests for banks.

    September 17, 2020 WebPage Regulatory News
    News

    PRA Announces Update on Supervisory Benchmarking Portfolio Exercise

    PRA published updates in relation to the 2021 Supervisory Benchmarking Portfolio exercise.

    September 14, 2020 WebPage Regulatory News
    News

    FED Revises and Extends Capital Assessment and Stress Testing Reports

    FED adopted a proposal to extend for three years, with revision, the capital assessments and stress testing reports (FR Y-14A/Q/M; OMB No. 7100-0341).

    September 14, 2020 WebPage Regulatory News
    News

    HKMA Updates Policy Module for Non-Centrally Cleared OTC Derivatives

    HKMA revised the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.

    September 11, 2020 WebPage Regulatory News
    News

    EBA Updates List of Validation Rules for Reporting by Banks

    EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.

    September 10, 2020 WebPage Regulatory News
    News

    EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework

    EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).

    September 10, 2020 WebPage Regulatory News
    News

    NGFS Advocates Environmental Risk Analysis for Financial Sector

    NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.

    September 10, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5803