BCBS Issues Framework for STC Short-Term Securitizations
BCBS issued the standard for capital treatment of simple, transparent, and comparable (STC) short-term securitizations. This standard supplements the criteria for identifying STC short-term securitizations, which BCBS issued jointly with IOSCO. The short-term STC framework takes effect immediately.
The standard for capital treatment of STC short-term securitizations sets out additional guidance and requirements for applying preferential regulatory capital treatment for banks acting as investors in or as sponsors of STC short-term securitizations, typically in asset-backed commercial paper (ABCP) structures. The additional guidance and requirements in this standard are consistent with those for STC term securitizations set out in the Committee's July 2016 revisions to the securitization framework.
The criteria for identification of STC short-term securitizations take account of the characteristics of asset-backed commercial paper (ABCP) conduits, such as the short maturity of the commercial paper issued, the different forms of program structures, and the existence of multiple forms of liquidity and credit support facilities. Provided that the expanded set of STC short-term criteria are met, STC short-term securitizations will receive the same modest reduction in capital requirements as other STC term securitizations.
Similar to the STC framework for term securitizations, implementation of the STC short-term framework is not mandatory. Jurisdictions which consider that implementation costs exceed potential benefits retain the option not to implement the STC framework. The standard incorporates feedback collected during the public consultation, which was conducted in July 2017. Changes made include:
- Setting the minimum performance history for non-retail and retail exposures at five years and three years, respectively
- Clarifying that the provision of credit and liquidity support to the ABCP structure can be performed by more than one entity, subject to certain conditions
Related Links
- Press Release
- Standard for Short-Term STC Securitizations (PDF)
- Criteria for Short-Term STC Securitizations (PDF)
Effective Date: May 14, 2018
Keywords: International, Banking, STC Securization, ABCP Securitization, Capital Requirements, Basel III, IOSCO, BCBS
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
