EBA issues advice on securitisation

07 July 2015

Following the public hearing held on June 26, the EBA published the full text of its advice to the European Commission on a framework for qualifying securitisation. The EBA advice had been disclosed last week during the public hearing, so that concerned stakeholders could receive advance information on the EBA's proposed criteria for defining simple standard and transparent securitisation transactions.
The requirements detailed in the report propose a more risk-sensitive approach to capital regulation for long-term securitisation instruments, as well as for asset-backed-commercial paper. The report illustrates how the capital charges foreseen in the newly published revision of the Basel securitisation framework should be lowered so as to recognise the relative lower riskiness of qualifying products, while always keeping regulatory capital within the perimeter of a prudential surcharge.