EBA Finalizes Guidelines on the STS Criteria in Securitization
EBA published the final guidelines that provide a harmonized interpretation of the criteria for a securitization to be eligible as simple, transparent, and standardized (STS) on a cross-sectoral basis throughout EU. These guidelines will play a crucial role in the new EU securitization framework that becomes applicable on January 01, 2019, by providing a single point of consistent interpretation of the STS criteria for all entities involved in the STS securitization, including originators, sponsors, investors, competent authorities, and third party STS verifiers. These guidelines apply from May 15, 2018.
The guidelines, which were developed for both non asset-backed commercial paper (ABCP) and ABCP securitizations, clarify and ensure a common understanding of all the STS criteria, including those related to the expertise of the originator and servicer, the underwriting of standards, exposures in default and credit impaired debtors, and predominant reliance on the sale of assets. The guidelines will be applied on a cross-sectoral basis throughout EU with the aim to facilitate the adoption of the STS criteria, which is one of prerequisites for the application of a more risk-sensitive regulatory treatment under the new EU securitization framework.
The guidelines on STS criteria for ABCP securitizations apply in relation to the transaction- and program-level requirements of ABCP securitizations. Both these sets of guidelines are an important building block in a set of initiatives that aim to destigmatize and revive a sound securitization market in the EU and to facilitate further lending to the real economy in line with the objectives of the Capital Markets Union.
Related Links
- Press Release
- Guidelines on STS Criteria for Non-ABCP Securitization (PDF)
- Guidelines on STS Criteria for ABCP Securitization (PDF)
Keywords: Europe, EU, Banking, Securities, Securitization Framework, Securitization Regulation, STS Securitization, EBA
Previous Article
AMF Publishes Guidance on Disclosures for Climate Change RisksNext Article
FASB Appoints Richard Jones of EY as Its Next ChairRelated Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards