Response to draft Guidelines on the STS criteria for non-ABCP securitisation
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GLEIF will focus its comments on the use of the Legal Entity Identifier (LEI) in the consultation.
GLEIF recommends that required use of the LEI should be specified in the Guidelines.
For non-ABCP securitizations, the parties under the scope the regulation are originators, sponsors, SSPEs and institutional investors, with seller, original lender, servicer, trustee, debtor, guarantor, national competent authorities, the ESAs (EBA, ESMA, EIPOA), and third-party certifiers as other participants in this domain.
The consultation paper acknowledges the expectation that the implementation of the new EU securitization framework itself will be accompanied by considerable administrative, compliance and operational costs for both market participants and competent authorities. The Guidelines, as the subject of the consultation paper, should contribute to mitigation of such costs.
GLEIF views the drivers and benefits of using the LEI to identify parties to non-ABCP securitizations are similar to those relevant to the of the use of the LEI consistently to identify issuers, guarantors and offerors (with legal personality) in the EU Prospectus Regulation.
GLEIF proposes, starting with SSPEs of non-ABCP securitizations, that the LEI be used consistently to identify parties to non-ABCP securitizations. This vital information, the legal entities behind the roles of entities that are party to non-ABCP securitizations, will provide the standardization and transparency sought by the guidelines for non- ABCP securitisation during normal operation and will prove invaluable during times of deterioration of credit quality, potential insolvency, identification of underlying exposures and actual default.
The EBA also could consider further parallels of standardization and digitization to the EU Prospectus Regulation for the launch of non-ABCP securitizations by requiring that each program/program tranche be assigned the ISIN (International Securities Identification Number) and that the terms of non-ABCP securitizations be captured digitally at formation. By considering this, the EBA further could contribute to mitigation of the implementation costs of the new EU securitization framework through the Guidelines.
Q4. With respect to the interpretation of the criterion in Article 20(5), should the severe deterioration in the seller credit quality standing, and the measures identifying such severe deterioration, be further specified in the guidelines? Do you believe that the interpretation should refer to the state of technical insolvency (i.e. state where based on the balance sheet considerations the seller reaches negative net asset value with its the liabilities being greater than its assets, without taking into account cash flows or events of legal insolvency), and if yes, should it be specified whether it should or should not be considered as the trigger effecting perfection of transfer of underlying exposures to SSPE at a later stage?
GLEIF will not provide a response to this question.Q5. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q6. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q7. Do you agree with the techniques of portfolio management that are allowed and disallowed, under the requirement of the active portfolio management? Should other techniques be included or excluded?
GLEIF will not provide a response to this question.Q8. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q9. Do you believe that additional guidance should be provided in these guidelines with respect to the homogeneity requirement, in addition to the requirements specified in the Delegated Regulation (EU) 2018/.... further specifying which underlying exposures are deemed homogeneous?
GLEIF will not provide a response to this question.Q10. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q11. Do you agree with this balanced approach to the determination of the expertise of the servicer? Do you believe that more rule-based set of requirements should be specified, or, instead, more principles-based criteria should be provided? Is the requirement of minimum of 5 years of professional experience appropriate and exercisable in practice?
GLEIF will not provide a response to this question.Q12. Should alternative interpretation of the “similar exposures” be provided, such as, for example, referencing the eligibility criteria (per Article 20(7)) that are applied to select the underlying exposures? Similar exposure under Article 20(10) could thus be defined as an exposure that would qualify for the portfolio, based on the exposure level eligibility criteria (not portfolio level criteria) which has not been selected for the pool and which was originated at the time of the securitised exposure (e.g. an exposure that has repaid / prepaid by the time of securitisation). Similar interpretation could be used for the term “exposures of a similar nature” under Article 20(10), and “substantially similar exposures” under Article 22(1). The eligibility criteria considered should take into account the timing of the comparison. Please provide explanations which approach would be more appropriate in providing clear and objectively determined interpretation of the “similarity” of exposures.
GLEIF will not provide a response to this question.Q13. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q14. Do you agree with the interpretation of the criterion with respect to exposures to a credit impaired debtor or guarantor?
GLEIF will not provide a response to this question.Q15. Do you agree with the interpretation of the requirement with respect to the exposures to credit-impaired debtors or guarantors that have undergone a debt-restructuring process?
GLEIF will not provide a response to this question.Q16. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q17. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q18. Do you agree with the interpretation of the predominant dependence with reference to 30% of total initial exposure value of securitisation positions? Should different percentage be set dependent on different asset category securitised?
GLEIF will not provide a response to this question.Q19. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q20. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q21. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q22. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q23. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q24. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q25. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q26. Do you agree with this balanced approach to the determination of the expertise of the servicer? Do you believe that more rule-based set of requirements should be specified, or, instead, more principles-based criteria should be provided? Is the requirement of minimum of 5 years of professional experience appropriate and exercisable in practice?
GLEIF will not provide a response to this question.Q27. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q28. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q29. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q30. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q31. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q32. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q33. Please provide further details and suggestions what type of information is available for residential loans and auto loans and leases, that could be provided under this requirement.
GLEIF will not provide a response to this question.Q34. Do you agree with the interpretation of this criterion, and the aspects that the interpretation is focused on? Should interpretation be amended, further clarified or additional aspects be covered? Please substantiate your reasoning.
GLEIF will not provide a response to this question.Q35. Do you agree that no other requirements are necessary to be specified further? If not, please provide reference to the relevant provisions of the STS Regulation and their aspects that require such further specification.
he Global Legal Entity Identifier Foundation (GLEIF) is pleased to provide comments to the European Banking Authority Draft Guidelines on the STS criteria for non-ABCP securitisation Consultation Paper.GLEIF will focus its comments on the use of the Legal Entity Identifier (LEI) in the consultation.
GLEIF recommends that required use of the LEI should be specified in the Guidelines.
For non-ABCP securitizations, the parties under the scope the regulation are originators, sponsors, SSPEs and institutional investors, with seller, original lender, servicer, trustee, debtor, guarantor, national competent authorities, the ESAs (EBA, ESMA, EIPOA), and third-party certifiers as other participants in this domain.
The consultation paper acknowledges the expectation that the implementation of the new EU securitization framework itself will be accompanied by considerable administrative, compliance and operational costs for both market participants and competent authorities. The Guidelines, as the subject of the consultation paper, should contribute to mitigation of such costs.
GLEIF views the drivers and benefits of using the LEI to identify parties to non-ABCP securitizations are similar to those relevant to the of the use of the LEI consistently to identify issuers, guarantors and offerors (with legal personality) in the EU Prospectus Regulation.
GLEIF proposes, starting with SSPEs of non-ABCP securitizations, that the LEI be used consistently to identify parties to non-ABCP securitizations. This vital information, the legal entities behind the roles of entities that are party to non-ABCP securitizations, will provide the standardization and transparency sought by the guidelines for non- ABCP securitisation during normal operation and will prove invaluable during times of deterioration of credit quality, potential insolvency, identification of underlying exposures and actual default.
The EBA also could consider further parallels of standardization and digitization to the EU Prospectus Regulation for the launch of non-ABCP securitizations by requiring that each program/program tranche be assigned the ISIN (International Securities Identification Number) and that the terms of non-ABCP securitizations be captured digitally at formation. By considering this, the EBA further could contribute to mitigation of the implementation costs of the new EU securitization framework through the Guidelines.