EBA publishes final draft Technical Standards on securitisation retention rules

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.

Legal basis

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.