FCA Consults on Standards for STS Notifications for Securitizations
FCA, via CP19/26, is proposing technical standards on the content and format of simple, transparent, and standardized (STS) notifications under the onshored Securitization Regulation. These UK-specific technical standards for Securitization Regulation are intended to prepare for the event that the UK leaves EU on October 31, 2019 without an implementation period and the relevant EU technical standards have not been brought into UK law as part of the EU Withdrawal Act. With this consultation, FCA seeks to ensure that it has adequate technical standards to support a well-functioning STS securitization market in UK and can effectively supervise firms’ compliance with the requirements of the EU Securitization Regulation, as amended by the Securitization (Amendment) (EU Exit) Regulations 2019 on the Exit day, assuming a no-deal Brexit. The consultation on these technical standards closes on August 27, 2019. FCA plans to publish final or near-final technical standards in a Policy Statement on or very near to the Exit day. FCA also intends to publish further consultations covering the remaining technical standards.
The proposed technical standards are consistent with the draft technical standards on STS notifications, which ESMA has previously consulted on in an EU context. The draft ESMA standards are laid out in the (July 2018) final report on the draft technical standards on STS Notification under the Regulation 2017/2402 and will be well-known to UK participants in the securitization market. The proposed technical standards contain cross-references to an EU instrument that is yet to be brought into UK law. Further amendments to the proposed technical standards may be required to appropriately deal with these cross-references. These proposals will be of interest to anyone involved in securitizations; this includes firms involved in securitization markets either as investors or manufacturers (originators, sponsors, or securitization special purpose entities) of securitizations; individuals holding offices or positions involving responsibility for taking management decisions at originators and sponsors; and third-party verifiers assessing compliance with STS criteria. The consultation paper introduces proposals and the accompanying draft instruments for the technical standards that
- Specify the information that originators and sponsors are required to provide to comply with the STS notification requirement
- Establish the templates to be used for the provision of the required information in the technical standards on STS notifications
While the EU Securitization Regulation has been in force since January 01, 2019, several subordinate EU technical standards clarifying the detailed obligations imposed on firms have been delayed. These are being finalized in stages over the coming months. If these standards become operative while the UK is still a member of EU, they will apply directly and will be brought into UK law on Exit day, as part of the Government’s European Union (Withdrawal) Act 2018 (EUWA). However, if they become operative after UK leaves EU, they fall outside the scope of the EUWA powers. This means that to have such technical standards in force in UK, FCA can make those standards under the powers on exit but must consult on them. This consultation paper prepares for that circumstance, consulting on the proposed UK technical standards.
Related Links
Comment Due Date: August 27, 2019
Keywords: Europe, EU, UK, STS Securitization, CP19/26, Brexit, Banking, Securities, Implementing Technical Standards, Regulatory Technical Standards, Securitization Regulation, FCA
Previous Article
BCBS Issues Basel III Monitoring Updates in January 2019Related Articles
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
MFSA Sets Out Supervisory Priorities, Issues Reporting Updates
The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023
German Regulators Issue Multiple Reporting Updates for Banks
Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
