ESAs Issue Q&A and Opinion on Provisions of Securitization Regulation
ESAs jointly published a set of questions and answers (Q&A) on cross-sectoral aspects of the Securitization Regulation. The Q&A clarify the content and format of the information of a securitization transaction that should be disclosed by the originator, sponsor, and special purpose entity issuer. The Q&A also clarify the transaction documentation of a Simple, Transparent, and Standardized (STS) securitization that should be made publicly available to facilitate investor compliance with its due diligence requirements as well as the type of STS certification services that can be provided by Third Party Verifiers to the securitization parties. Another joint publication from ESAs sets out an opinion on the jurisdictional scope of the obligations of the non-EU parties (or third-country parties) to securitizations under the Securitization Regulation.
The joint opinion on jurisdictional scope is intended to facilitate the understanding of certain provisions of the Securitization Regulation in cases where third-country entities become parties to a securitization and is intended to help improve the functioning of securitization markets in EU. The opinion clarifies the potential obligations of such third-country parties as well as related compliance aspects of a transaction under the Securitization Regulation. In this opinion, ESAs set out their common view on the practical difficulties faced by market participants in connection with the jurisdictional scope of application of various provisions in the Securitization Regulation in the following scenarios:
- Securitizations where some, but not all, of their sell-side parties—including originator, original lender, sponsor, and special purpose entity issuer—are located in a third country
- Securitizations where all sell-side parties are located in a third-country and EU investors invest in them
- Investments in securitizations by subsidiaries of EU regulated groups, where those subsidiaries are located in a third country
- Securitizations where one of the parties is a third-country investment fund manager
The joint opinion recommends that these difficulties should be addressed, where possible, through interpretative guidance from EC. ESAs also invite EC to undertake a comprehensive review of the jurisdictional scope framework of the Securitization Regulation as part of the upcoming overall reform of this Regulation, as a means of thoroughly addressing market participants’ concerns regarding proper market functioning.
Related Links
Keywords: Europe, EU, Banking, Insurance, Q&A, Securitization Regulation, STS Securitization, Jurisdictional Scope, Third-Country Parties, Opinion, EC, ESAs
Related Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.