Article 29(5) of the Regulation (EU) 2017/2402 requires Member States to designate one or more competent authorities to supervise compliance by, among others, originators with Articles 18 to 27 thereto.

In this respect, Article 2.3 of the Regulation (EU) 2017/2402 defines originator as an entity which:  

(a) itself or through related entities, directly or indirectly, was involved in the original agreement which created the obligations or potential obligations of the debtor or potential debtor giving rise to the exposures being securitised; or

(b) purchases a third party’s exposures on its own account and then securitises them;

The term entity is not defined in the Regulation (EU) 2017/2402 (or in Directive 2013/36/EU or Regulation (EU) No 575/2013).The term entity is used in other pieces of EU legislation though e.g. financial sector entity, securitisation special purpose entity, resolution entity, GSII entity, etc. However, those cases seem to exclude branches, since they refer to legal entities. 

Further, Article 4.1(17) of CRR defines a branch as “a place of business which forms a legally dependent part of an institution and which carries out directly all or some of the transactions inherent in the business of institutions”. 

Considering the above, two possible interpretations may be upheld: either a branch of a credit institution could qualify as originator; or, in all cases, the “originator” should be the credit institution itself (acting through its branch).

The  answer to the previous question would determine the allocation of supervisory responsibilities among different Member States. In particular, pursuant to Article 29(5) of the Regulation (EU) 2017/2402 each Member State shall designate one or more competent authority to “supervise the compliance of originators [located in its jurisdiction] […] with Articles 18 to 27”. 

Considering the above, the following two scenarios are possible, depending on whether a branch is considered or not as an “originator”:

a)            If a branch of a credit institution qualifies as an “originator”: the supervision of the STS requirements should be allocated to the competent authority(ies) designated by the Member State where the branch of the credit institution is located (rather than where the institution is incorporated and supervised under CRD-CRR).

b)            If a branch of a credit institution does not qualify as an “originator”: the credit institution itself should comply with the STS requirements and the supervision of those STS requirements should be allocated to the competent authority(ies) designated by the Member State where the credit institution is incorporated, irrespective of the location of its branch.