Featured Product

    EC Finalizes Regulation on Framework for STS and Other Securitizations

    December 28, 2017

    EC published EU Regulation 2017/2402, which lays down a general framework for securitization and creates a specific framework for simple, transparent, and standardized (STS) securitization. This Regulation amends Directives 2009/65/EC, 2009/138/EC, and 2011/61/EU, in addition to Regulations (EC) No 1060/2009 and (EU) No 648/2012. This Regulation 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.

    This Regulation applies to institutional investors and to originators, sponsors, original lenders, and securitization special purpose entities (SSPEs). This Regulation only allows for "true-sale" securitizations to be designated as STS. In a true-sale securitization, the ownership of the underlying exposures is transferred or effectively assigned to an issuer entity, which is a SSPE. This Regulation introduces a ban on resecuritization, subject to derogations for certain cases of resecuritizations that are used for legitimate purposes and to clarifications as to whether asset-backed commercial paper (ABCP) programs are considered to be resecuritizations. Resecuritizations should only be permitted in specific instances as established by this Regulation. A more risk-sensitive prudential framework for STS securitizations is important to ensure that EU functions as a single market for STS securitizations and that it facilitates cross-border transactions. The development of STS securitization market also constitutes a building block of the Capital Markets Union.

    The Regulation stipulates that, where a securitization no longer meets the STS requirements, the originator and sponsor should immediately notify ESMA and the relevant competent authority. Moreover, where a competent authority has imposed administrative sanctions with regard to a securitization notified as being STS, that competent authority should immediately notify ESMA for their inclusion on the STS notifications list allowing investors to be informed about such sanctions and about the reliability of STS notifications. The requirements for using the "STS" designation are new and will be further specified by EBA guidelines and supervisory practice over time. This Regulation should apply to securitizations, the securities of which are issued on or after January 01, 2019. For securitization positions outstanding as of January 01, 2019, originators, sponsors, and SSPEs should be able to use the designation "STS" provided that the securitization complies with the STS requirements, for certain requirements at the time of notification and for other requirements at the time of origination.

     

    Related Link: EU Securitization Regulation

    Effective Date: January 17, 2018

    Keywords: Europe, EU, Banking, Securities, STS Securitization, Securitization Framework, Regulation 2017/2402, EC

    Featured Experts
    Related Articles
    News

    HKMA on Fintech Adoption and Innovation by Banks in Hong Kong

    HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.

    May 20, 2020 WebPage Regulatory News
    News

    BIS on Impact of Increasing Use of Cloud Technology on Cyber Risk

    BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guide for Managing Climate and Environmental Risks

    ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Issues Opinion on Revisions to CRR in Response to COVID Crisis

    ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.

    May 20, 2020 WebPage Regulatory News
    News

    EBA Assesses Interlinkages Between Recovery and Resolution Planning

    EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).

    May 20, 2020 WebPage Regulatory News
    News

    SRB Publishes Final MREL Policy Under the Banking Package

    SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.

    May 20, 2020 WebPage Regulatory News
    News

    US Agencies Amend Interim Final Rule on Transition Period for CECL

    US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.

    May 19, 2020 WebPage Regulatory News
    News

    ECB Releases Results of March Survey on Credit Terms and Conditions

    ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.

    May 19, 2020 WebPage Regulatory News
    News

    FINMA Adjusts Deadlines for COVID-19 Relief Measures for Banks

    FINMA published guidance (06/2020) on extending or discontinuing various exemptions that were granted due to the COVID-19 crisis.

    May 19, 2020 WebPage Regulatory News
    News

    SRB Consults on Standardized Data Set for Bank Valuation in Resolution

    SRB launched a consultation on the minimum data needed for valuation of a bank in resolution.

    May 19, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5203