![]() ![]() Authorized third parties will not be permitted to provide any form of advisory, audit or equivalent service to the originator, sponsor or special purpose vehicle (SPV) issuer and must have operational safeguards, monitoring and a management structure to ensure no conflicts of interest. Authorization will only be granted where the third party is independent, charges non-discriminatory fees on a cost-recovery basis, and has necessary professional qualifications, knowledge, experience and a good reputation. In order for a third party to verify compliance with the STS criteria, it must be authorized by ESMA. Third party certification, however, will not absolve originators, sponsors and issuers from liability for making STS assertions that turn out to be false. The Securitisation Regulation sets out an optional process whereby an authorized third party can attest to the satisfaction of the STS criteria. Originators, sponsors and issuers will be jointly responsible under the Securitisation Regulation for assigning the STS designation. This applies to all transactions, including where the investors are not CRR-regulated credit institutions or investment firms (which is not currently the case under the CRR).Īre the STS eligibility criteria satisfied? For example, originators, sponsors and original lenders will be under a new positive obligation to retain a five percent net economic interest in securitisation transactions. While these requirements are not new to the market generally, they will apply more widely under the Securitisation Regulation. To obtain an STS designation, a securitisation first needs to comply with the general rules of the Securitisation Regulation that apply to all European securitisation s, such as the risk retention, transparency and due diligence requirements. Step one – check general compliance with the Securitisation Regulation However, this guide is not meant to replace sound legal advice, as the eligibility criteria need to be applied and processes carried out individually to each transaction. We have set out below some practical steps to be taken in the STS analysis. ![]() While the European Commission has made encouraging noises in respect of extending STS capital relief to insurers, the impact of the new STS framework may be muted if insurers are effectively excluded from benefitting from preferential capital treatment.Īchieving STS capital treatment for securitisation s is therefore a multi-step process - transactions that satisfy the STS eligibility criteria set out the Securitisation Regulation will need to pass additional tests in the SPR. ![]() The SPR, which focuses on CRR-regulated credit institutions and investment firms, does not afford the same STS capital relief to other institutional investors such as pension funds, insurance and reinsurance undertakings. In addition, not all types of investor will be able to benefit from preferential capital treatment for qualifying transactions. If a securitisation transaction obtains the STS label, it is not guaranteed to receive preferential capital treatment. While the legislation will apply to securitisation s completed after January 1, 2019, legacy securitisation s outstanding on that date may be eligible to use the STS designation, provided that the transaction and underlying assets comply with procedural and structural requirements at the time of notification to the European Securities and Markets Authority (ESMA), and provided that other requirements are met at the time of origination (such as risk retention and criteria for credit-granting). banks and investment firms) can benefit potentially from more favorable regulatory capital treatment for STS securitisation exposures. Regulation (EU) 2017/2401 (the securitisation Prudential Regulation, or SPR) replaces certain provisions of the Capital Requirements Regulation (CRR) and sets out the framework under which certain institutional investors (e.g. Regulation (EU) 2017/2402 (the Securitisation Regulation) consolidates the patchwork of legislation governing European securitisation s, and introduces a new framework for simple, transparent and standardized (STS) securitisation s. On Janutwo EU Regulations setting out a new framework for European securitisation entered into force. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |