EBA consults on draft Technical Standards on risk retention for securitisation transactions

The European Banking Authority (EBA) launched today a public consultation on its draft Regulatory Technical Standards (RTS) specifying the requirements for originators, sponsors and original lenders related to risk retention as laid down in the new EU securitisation framework (STS Regulation). The RTS aim to provide clarity on the requirements relating to risk retention, thus reducing the risk of moral hazard and aligning interests. The consultation runs until 15 March 2018.

 

The new Securitisation Regulation sets out, amongst other matters, requirements on the retention of material net economic interest in relation to exposures to securitisations, which will replace the requirements currently set out in the Capital Requirements Regulation (the CRR).

 

As a consequence, these draft RTS will replace the current Commission Delegated Regulation on risk retention. However, given the cross-sectoral nature of its application, the new STS Regulation contains transitional provisions regarding the application of the existing Delegated Regulation to those securitisations whose securities were issued before its application date.

In addition, due to the narrower mandate under the STS Regulation as opposed to that which was set out in the CRR for the current Delegated Regulation, certain provisions from the existing Delegated Regulation were not included in these draft RTS, in particular those relating to due diligence requirements, policies for credit granting and disclosure of materially relevant data.

 

Furthermore, various new provisions were added, in particular relating to when an entity shall be deemed not to have been established or to operate for the sole purpose of securitising exposures, transfers or hedging of the retained interest, circumstances under which the retainer should be changed and adverse selection of assets.

Responses to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 15 March 2018.

 

A public hearing will take place at the EBA premises on 19 February 2018 from 14:00 to 16:00 hours UK time. 

The draft Regulatory Technical Standards have been developed according to Article 6 of the STS Securitisation Regulation, which lays down requirements relating to risk retention. In particular, Article 6(7) of that Regulation sets out a mandate for the EBA to develop draft regulatory technical standards to specify in greater detail the risk retention requirement.

 

The new STS Regulation is one of the cornerstones of the Capital Markets Union (CMU), the Commission's pivotal project to build a single market for capital in the EU. The STS Regulation lays down common rules on securitisation and creates a European framework for simple, transparent and standardised securitisation. The Regulation sets out requirements concerning the retention of material net economic interest and other requirements related to exposures to securitisations, which will replace those currently set out in the Capital Requirements Regulation (the CRR), and requires the EBA to prepare, in close cooperation with ESMA and EIOPA, draft Regulatory Technical Standards in this area.