Featured Product

    ESAs Clarify Securitization Disclosure Requirements for Institutions

    November 30, 2018

    ESAs (EBA, EIOPA, and ESMA) published a statement in response to the industry concerns about severe operational challenges in meeting the transitional provisions of the Securitization Regulation disclosure requirements. The statement also addressed concerns about complying with the EU requirements on risk retention, transparency, re-securitization, and criteria for credit-granting obligations on a consolidated basis by EU credit institutions engaged in local securitization activities in third countries.

    The Securitization Regulation (EU Regulation 2017/2402) enters into force on January 01, 2019. The regulation contains a set of high-level transparency requirements, which must be met by reporting entities (that is, the entity designated among the securitization originator, sponsor, and Securitization Special Purpose Entity to fulfill these requirements). The details and standardized templates to be used to fulfill these requirements will be further specified in a Commission Delegated Regulation using as a basis a set of draft regulatory and implementing technical standards developed by ESMA (the ESMA disclosure templates). ESMA and EC are considering how to address market concerns raised about some aspects of the ESMA disclosure templates. These templates are, therefore, unlikely to be adopted by January 01, 2019; therefore, the Securitization Regulation transitional provisions will apply. The transitional provisions require that the CRA3 templates (templates under the Credit Rating Agencies Regulation) be used until the ESMA disclosure templates are adopted. 

    However, the reporting entities may need to make substantial and costly adjustments to their reporting systems to comply with the CRA3 templates on a temporary basis, until the ESMA disclosure templates enter into application. Therefore, ESAs expect competent authorities to generally apply their supervisory powers in their day-to-day supervision and enforcement of applicable legislation in a proportionate and risk-based manner. This approach entails that competent authorities can, when examining reporting entities’ compliance with the disclosure requirements of the Securitization Regulation, take into account the type and extent of information already being disclosed by reporting entities. This approach entails a case-by-case assessment, by the competent authorities, of the degree of compliance with the Securitization Regulation. The ESAs and competent authorities expect that these difficulties will be solved with the subsequent adoption of the ESMA disclosure templates and, thus, the expiry of the transitional arrangements involving the CRA3 templates in the Securitization Regulation.

    Moreover, the EU banking entities are facing challenges with regard to complying with specific provisions of the CRR Amending Regulation relating to the scope of the Chapter 2 (due-diligence, risk retention, transparency, resecuritization and criteria for credit-granting) requirements in the Securitization Regulation. ESAs and competent authorities expect that these difficulties will be solved with the adoption of the new Capital Requirements Amending Regulation (CRR 2) under which the scope of Article 14 of the CRR is expected to be reduced and references to Chapter 2 will be replaced with reference to Article 5 (due-diligence requirements) only.

     

    Related Links

    Keywords: Europe, EU, Banking, Securitization Regulation, CRA Regulation, Disclosures, Reporting, Transitional Provisions, CRR 2, ESAs

    Featured Experts
    Related Articles
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    News

    FASB Proposes Taxonomy Changes Related to Topics 848 and 470

    FASB proposed taxonomy improvements for the proposed Accounting Standards Update on topic 848 on facilitation of effects of reference rate reform on financial reporting.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Statement on Recalculating Transitional Measures Under Solvency II

    BoE notified that it will be willing to accept applications from firms to recalculate transitional measure on technical provisions (TMTP) as at September 30, 2019.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Hosts Conference to Discuss Issues from Emergence of Stablecoins

    BIS hosted a conference in Basel to discuss policy and regulatory issues posed by the emergence of stablecoin initiatives backed by financial institutions and large technology companies.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Paper on Embedded Supervision of Blockchain-Based Financial Market

    BIS published a working paper that investigates ways to regulate and supervise blockchain-based financial markets.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Paper on Market-Implied Systemic Risk and Shadow Capital Adequacy

    BoE published a working paper that presents a forward-looking approach to measure systemic solvency risk.

    September 13, 2019 WebPage Regulatory News
    News

    HKMA Consults on Policy Module on Pillar 2 Supervisory Review Process

    HKMA is consulting on the revised Supervisory Policy Manual module CA-G-5 that sets out the HKMA approach to conducting the supervisory review process under Pillar 2.

    September 13, 2019 WebPage Regulatory News
    News

    PRA Publishes Waiver by Consent of Continuity of Access Rules

    PRA published a new waiver by consent to waive the Continuity of Access requirements contained in the Depositor Protection Part of the PRA Rulebook (DPP).

    September 13, 2019 WebPage Regulatory News
    News

    EBA Single Rulebook Q&A: Second Update for September 2019

    EBA updated the Single Rulebook question and answer (Q&A) tool with answers to three questions.

    September 13, 2019 WebPage Regulatory News
    News

    BoE Publishes Update on Meeting of Working Group on Risk-Free Rates

    BoE published the minutes of the July meeting of working group on sterling risk-free reference rates.

    September 13, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3827