Simple and transparent securitisation

At the end of 2017 the European Union adopted two regulations on simple and transparent securitisation:

1. Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012.
2. Regulation (EU) 2017/2401 of the European Parliament and of the Council of 12 December 2017 amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms.

Both regulations shall apply from 1 January 2019.

As we informed in one of the previous articles these regulations represent a part of the EU action plan on the capital market union. The first Regulation applies to all securitisation products and includes due diligence, risk retention and transparency rules together with a clear set of criteria to identify simple, transparent and standardised (STS) securitisations. The second Regulation is an amendment of CRR to make the capital treatment of securitisations for banks and investment firms more risk-sensitive and able to properly reflect the specific features of STS securitisations. European Commission believes that structured soundly securitisation is an important channel for diversifying funding within the economy. Therefore, the new rules aim to re-establish a safe securitisation market in Europe.