EC published the Commission Delegated Regulation (EU) 2018/1221 on the calculation of regulatory capital requirements for securitizations and simple, transparent, and standardized (STS) securitizations held by insurance and reinsurance undertakings. For the purpose of this regulation, the existing provisions of Delegated Regulation (EU) 2015/35 on calibration for “type 1 securitization" are being replaced by a more risk-sensitive calibration for STS securitization, covering all possible tranches that also meet additional requirements to minimize risks. Regulation (EU) 2018/1221 shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply from January 01, 2019.
To ensure a sound recovery of the EU securitization market, a new regulatory framework for securitization was laid down, based on lessons learned during the financial crisis. Regulation (EU) 2017/2402 lays down the substantive elements of an overarching securitisation framework, with criteria to identify STS securitizations and a system of supervision to monitor the correct application of those criteria by originators, sponsors, issuers, and institutional investors. Furthermore, that Regulation provides for a set of common requirements in relation to risk retention, due diligence, and disclosure for all financial services sectors. In addition, Regulation (EU) 2017/2401 amends, with effect from January 01, 2019, the Capital Requirements Regulation (Regulation No 575/2013) to provide for revised prudential requirements for credit institutions and investment firms originating, sponsoring, or investing in securitizations, particularly revised capital requirements for investments in STS securitization.
In light of the application dates of Regulation (EU) 2017/2402 and Regulation (EU) 2017/2401 as well as the transitional provisions contained in those pieces of legislation, it is important to ensure that Regulation (EU) 2018/1221 becomes applicable on the same date—that is, on January 01, 2019. To the extent that the revised legislative framework for securitization overlaps with the scope of provisions laid down in Commission Delegated Regulation (EU) 2015/35, it is necessary, in order to avoid double regulation and for reasons of clarity and consistency, to adapt the prudential framework applicable to insurance and reinsurance undertakings.
- Regulation (EU) 2018/1221
- Regulation (EU) 2017/2402
- Regulation (EU) 2017/2401
- Regulation (EU) 2015/35
Effective Date: September 30, 2018
Keywords: Europe, EU, Insurance, Securitization Regulation, STS Securitization, CRR, Regulation 2018/1221, EC
Previous ArticleESRB Publishes the Annual EU Shadow Banking Monitor
Next ArticleEBA Revises List of Validation Rules for Reporting
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
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).
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.
MAS published the guidelines on individual accountability and conduct at financial institutions.
APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.
SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.
ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.
OSFI published the key findings of a study on third-party risk management.
FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.