EBA Consults on Standards on Risk Retention for Securitizations
EBA launched a public consultation on the draft regulatory technical standards specifying the requirements for originators, sponsors, and original lenders related to risk retention—as laid down in the new EU securitization framework (namely, Simple, Transparent and Standardized, or STS, Regulation). The consultation runs until March 15, 2018.
The new securitization regulation sets out, among other matters, requirements on the retention of material net economic interest in relation to exposures to securitizations, which will replace the requirements currently set out in the Capital Requirements Regulation (CRR). As a consequence, these draft regulatory technical standards will replace the current Commission Delegated Regulation on risk retention. However, given the cross-sectoral nature of its application, the new STS Regulation contains transitional provisions regarding the application of the existing Delegated Regulation to those securitizations whose securities were issued before its application date.
In addition, due to the narrower mandate under the STS Regulation, as opposed to that which was set out in the CRR for the current Delegated Regulation, certain provisions from the existing Delegated Regulation were not included in these draft regulatory technical standards, in particular those relating to due diligence requirements and policies for credit granting and disclosure of materially relevant data. Furthermore, various new provisions were added, in particular related to when an entity shall be deemed not to have been established or to operate for the sole purpose of securitizing exposures, transfers, or hedging of the retained interest.
Related Link: Press Release
Comment Due Date: March 15, 2018
Keywords: Europe, EU, Banking, Regulatory Technical Standards, Securitization Framework, STS Securitization, CRR, EBA
Previous Article
US Agencies Propose to Simplify Regulatory Capital RulesRelated 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