Adopted and published on the Official Journal
Both the RTS and the ITS aim at re-establishing securitisation on a sustainable basis mainly by encouraging market participants to develop a more transparent and uniform securitisation market and by enabling more convergence of supervisory practices across Europe with regards to the securitisation retention rules and related requirements.
The European Banking Authority published today its final draft Regulatory Technical Standards (RTS) on securitisation retention rules and related requirements, as well as its final draft Implementing Technical Standards (ITS) on the convergence of supervisory practices related to the implementation of additional risk weights in the case of non-compliance with the retention rules.
These RTS and ITS provide greater clarity and transparency for market participants, and will support compliance and foster convergence in supervisory practices across the European Union (EU).
The key objectives of the draft RTS are two-fold: creating an alignment of interest (risk) and information between securitisation sponsors, originators, original lenders and investors buying securitisation transactions; and secondly, facilitating the implementation of the 5 % retention and disclosure requirements of the sponsor, originator or original lender and the due diligence requirements of investors in securitisations.
The draft ITS specify the measures that are to be taken by competent authorities in cases of material breaches of the securitisation retention rules and related requirements. In particular, these ITS provide assessment criteria for breaches, as well as calculation and implementation for additional risk weights that are to be applied by competent authorities.
The securitisation market in the EU should play an important role in meeting the funding needs of originators and sponsors and the asset diversification needs of investors in the EU. To this regard, the RTS and ITS published today by the EBA aim at encouraging market participants to move towards a more transparent and more uniform securitisation market.
The EBA finalised these draft RTS and ITS following a public consultation in May 2013; comments received were taken into account, where possible.
These RTS and ITS have been developed respectively in accordance with Article 410(2) and 410 (3) of the final version of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (colloquially known as Capital Requirements Regulation or CRR).
The final standards have been sent today to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.
The European Banking Authority launches today a consultation paper on (i) draft Regulatory Technical Standards (RTS) to specify the securitisation retention rules and related requirements and (ii) draft Implementing Technical Standards (ITS) to clarify the measures to be taken in the case of non-compliance with such obligations. The consultation runs until 22 August 2013.
Both the RTS and the ITS ultimately aim at re-establishing securitisation on a sustainable basis mainly by encouraging market participants to develop a more transparent and uniform securitisation market and by enabling more convergence of supervisory practices across Europe with regards to the securitisation retention rules and related requirements.
The key objectives of the draft RTS are i) an alignment of interest (risk) and information between securitisation sponsors, originators and original lenders and the investors buying securitisation transactions and ii) to facilitate the implementation of the 5% retention requirements and disclosure requirements of the sponsor, originator or original lender and the due diligence requirements of investors in securitisations.
The objective of the draft ITS is to specify the measures to be taken in the case of a material breach of the securitisation retention rules and related requirements. In particular, the ITS provide the assessment criteria for breaches of the Capital Requirements Regulation (CRR) and RTS requirements, as well as the implementation conditions and the calculation of additional risk weights to be applied by competent authorities.
The EBA is requested to submit the draft RTS and ITS to the European Commission by 1 January 2014.
Background
The final compromise on the Capital Requirements Regulation and Capital Requirements Directive (CRR/CRD) provides a mandate for the EBA to further specify the securitisation retention rules and related requirements as well as the measures to be taken in the case of a breach of the obligations relating to the retention, due diligence and disclosure requirements.
The EBA has developed these draft RTS and ITS taking into account: i) the changes in the level 1 text of the CRR compared to the CRD II, ii) the current Guidelines on Article 122a and the associated Q&A published in September 2011, and iii) relevant market developments
Consultation process
Comments to this consultation paper can be sent to the EBA by e-mail to EBA-CP-2013-14@eba.europa.eu by 22 August 2013, indicating the reference EBA/CP/2013/14.
All contributions received will be published following the close of the consultation, unless requested otherwise.
A public hearing will take place at the EBA premises on 22 July 2013 from 09:30 to 12:00 UK time. To register for the public hearing, click here.