EC Regulation on Homogeneity of Underlying Exposures in Securitization
EC published the Delegated Regulation 2019/1851 regarding the regulatory technical standards on the homogeneity of the underlying exposures in securitization. Regulation 2019/1851 supplements the Securitization Regulation (2017/2402) and its provisions deal with homogeneity for asset-backed commercial paper (ABCP) as well as non-ABCP securitizations. The Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
To achieve robust due diligence by investors and to facilitate the assessment of underlying risks in accordance with the aims of the Securitization Regulation, the underlying exposures of a securitization should share similar risk profiles. Thus, Regulation 2019/1851 lays down uniform criteria to determine the homogeneity of a given pool of underlying exposures. For the purposes of Articles 20(8) and 24(15) of the Securitization Regulation, underlying exposures shall be deemed to be homogeneous where all of the following conditions are met:
- They correspond to one of the asset types mentioned in Point (a) of Article 1 of Regulation 2019/1851.
- They are underwritten in accordance with standards that apply similar approaches for assessing associated credit risk.
- They are serviced in accordance with similar procedures for monitoring, collecting, and administering cash receivables on the asset side of the securitization special purpose entity.
- One or more of the homogeneity factors are applied in accordance with Article 2 of Regulation 2019/1851.
Related Links
Effective Date: November 26, 2019
Keywords: Europe, EU, Banking, Securities, STS Regulation, Securitization, Securitization Regulation, Homogeneity, Credit Risk, Regulation 2019/1851, ABCP Securitization, Non ABCP Securitization, EC
Next Article
CBRC Consults on Revised IRRBB Guidelines for BanksRelated Articles
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
