Brussels, 10 November 2015
WK 137/2015 INIT
LIMITE
EF
ECOFIN
SURE
WORKING PAPER
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WORKING DOCUMENT
From:
Presidency
To:
Delegations
N° Cion doc.:
COM(2015) 472 FINAL
Subject:
Presidency non-paper on the changes in the compromise proposal for the STSS
Regulation
WK 137/2015 INIT
LIMITE EN
WORKING DOCUMENT #6
Securitisation
Working Party on Financial Services
FROM: Presidency
Meeting of the Council Working Party on Financial Services (Securitisation)
12th November 2015 (10:00)
RATIONALE FOR CHANGES
Art. 1 (1)
Editorial change in line with Art. 2 (2).
Art. 1 (2)
Editorial change for the sake of coherence throughout the text.
Art. 2 (1) (a)
Alignment with CRR.
Art. 2 (1) new subpara.
Text added for clarification. The wording has been taken from
recital (6).
Art. 2 (2)
Text added to clarify that the SSPE is established for the ‘sole’
purpose for carrying out a securitization; alignment to CRR.
Art. 2 (3) (b)
Text added for clarification.
Art. 2 (5)
1) Term ‘transaction’ is deleted to align the definition to CRR
definition of ‘sponsor’;
2) The wording is amended for the sake of legal certainty. Even in
the case of a delegation, the responsibility will remain with the
sponsor.
Art. 2 (7)
The amendment is in line with the Basel revised framework.
Art. 2 (9)
1) Reference to ‘institution’ is deleted as the scope is broader
here than in the CRR;
2) Text changed for clarification.
Art. 2 (11)
In line with Art. 2 (19) (definition of ‘securitisation position’).
Art. 2 (12)
Editorial change.
Art. 2 (13)
Editorial change.
Art. 2 (15)
Text changed for clarification.
Art. 2 (17)
In line with Art. 2 (11) and Art. 2 (19).
Art. 2 (19)
As requested by certain MS, insertion of the definition of
‘securitisation position’. The wording is taken from Art. 4 (62)
CRR.
Art. 2 (20)
As requested by certain MS, the definition of ‘original lender’ has
been added.
Art. 3 (1) (a)
Text added to clarify that point (a) applies only if the originator
or original lender is established in the Union. The institutional
investor shall verify that the criteria for credit granting pursuant
to Art. 5a are applied.
Art. 3 (1) (aa) new
Point (aa) added in order to ensure via an indirect approach that
the criteria for credit granting are applied by the originator or
original lender in a third country.
Art. 3 (1) (b)
Text added to clarify that point (b) applies only if the originator
or original lender is established in the Union. The retention
requirement should be fulfilled on an ongoing basis.
Art. 3 (1) (ba)
Point (ba) added in order to ensure via an indirect approach that
the retention requirement is fulfilled.
Art. 3 (1a)
Insertion of a new paragraph to specify that with respect to fully
supported ABCP transactions, the sponsor (and not the
institutional investor) shall verify the credit granting criteria.
Art. 3 (2)
For clarity purposes, the drafting suggestion replaces the terms
‘commensurate with the risk’ without changing the substance.
Art. 3 (2) (a)
Text changed for clarification.
Art. 3 (2) (c)
1) In line with Art. 6.
2) The amendment aims at further clarifying the meaning of
appropriate reliance on the STS notification by stating that the
institutional investor shall not mechanistically rely on the
notification and information disclosed by the originator, sponsor
and SSPE.
Art. 3 (3) (a)
1) The amendment clarifies
that the written procedures include
all features relevant for the transaction and the type of
underlying exposure;
2) The term ‘commensurate’ is deleted and replaced by
alternative wording to enhance legal certainty.
Art. 3 (3) (b)
1) The amendment takes into account that the current provision
is not relevant for ABCP transactions;
2) Text added to take into account stress tests for synthetic
transactions;
3) The term ‘commensurate with‘ is deleted and replaced by
alternative wording to enhance legal certainty.
Art. 3 (3) (c)
Text deleted to enhance clarity and legal certainty.
Art. 3 (3) (d)
The amendment clarifies that the record keeping requirement
includes a documentation of each verification process and due
diligence as well as of any other relevant information.
Art. 3 (3) (e)
Insertion of point (e) to ensure that institutional investors have a
good understanding of the liquidity facility provided and the
credit quality of the sponsor in case of a fully-supported ABCP
transaction.
Art. 4 (1)
Text re-organized for clarification.
Art. 4 (2)
Editorial change for consistency purposes.
Art. 4 (3)
Text changed to include investment firms.
Art. 4 (4)
Editorial change.
Art. 4 (5)
As requested by several MS, this paragraph for which there was
no clear rationale is deleted.
Art. 4 (6) (e)
In line with deletion of Art. 4 (5).
Art. 5 (1) (a)
The amendment takes into account that a monthly requirement
to provide information on the underlying receivables or credit
claims in the case of an ABCP program might not be workable.
Art. 5 (1) (b)
Text re-organised to enhance clarity.
Art. 5 (1) (c) (i)
Text transferred from Art. 5 (1) (c) (v)
Art. 5 (1) (c) (iii)
Editorial change.
Art. 5 (1) (c) (iv)
In line with Art. 2 (19) (definition of ‘securitisation position’).
Art. 5 (1) (c) (v)
Text transferred to Art 5 (1) (c) (i).
Art. 5 (1) (d)
Editorial change.
Art. 5 (1) (e)
In line with Art. 5 (1) (a).
Art. 5 (1) (e) (ii)
For clarification purposes.
Art. 5 (1) (e) (iii)
Text deleted in order to avoid a circular reference; the
requirement is already covered by the relevant Article.
Art. 5 (1) (f)
Text added for the sake of clarity.
Art. 5 (1) (g) (i)
Editorial change.
Art. 5 (1) (g) (iii)
Text added to clarify the meaning of significant change.
Art. 5 (1) subpara 2
Cross-reference has been corrected.
Art. 5 (1) subpara 3
The text is amended for the sake of consistency.
Art. 5 (1) subpara 4
Text added to ensure consistency with Regulation (EU) No
596/2014 (MAR)
Art. 5 (1) subpara 5
To accommodate confidentiality concerns expressed by certain
MS, wording is added to clarify that the originator, sponsor and
SSPE of a securitisation shall comply with national and Union
legislation governing the protection of confidentiality of
information sources or the processing of personal data.
Art. 5 (2)
1) The amendment clarifies that the criteria are applicable to the
entity (and not the website).
2) Text added to clarify that the website might be password
protected.
Art. 5 (2) subpara. 2:
In line with subparagraph 1.
Art. 5 (3) (a)
Cross-reference is corrected. The amendment clarifies that
ESMA shall adopt a proportionate approach when developing
the draft regulatory technical standards.
Art. 5 (3) (b)
In line with Art. 5 (2).
Art. 5a
As article 408 of CRR is deleted by the regulation amending CRR,
a new Art. 5a that introduces criteria on credit granting
applicable to originators, sponsors and original lenders has been
inserted. The wording closely follows the requirements of Art.
408 CRR.
Chapter 3 (Title)
Editorial change.
Art. 6
1) Editorial change;
2) Text added to enhance legal certainty.
Art. 7
The drafting suggestion clarifies that the originator, sponsor and
SSPE involved in a STS securitisation shall be stablished in the
Union. (Erratum: this requirement shall also apply to ABCPs, the
new subparagraph will hence have to be either transferred to
Art. 6 or duplicated in Art. 11)
Art. 8 (Title)
Editorial change.
Art 8(1)
1) insertion of a wording to clarify that when the assets are
transferred to the SSPE, it is in fact the “title” over the assets that
is transferred;
2) to encompass all title transfer scenarios across jurisdiction, it
is proposed to add “transfer with the same legal effect”;
3) to respond to concerns from various MS, the wording has
been adapted in order to better take into consideration the
features of national insolvency laws;
4) in line with the EBA report, it is proposed to insert a reference
to the provision of a legal opinion.
5) the wording clarifies that when the originator is not the
original lender (i.e. when the original lender has transferred the
assets or claims against the debtors to an originator), the
conditions
regarding
the
enforceability
of
the
true
sale/assignment also applies to the transfer between the original
lender and the originator.
Art. 8(2)
The drafting suggestion strengthens the wording in order to
ensure that the underlying exposures are not encumbered.
Art. 8(3)
The changes clarify and strengthen the wording. The last
sentence also clarifies that at least the same eligibility criteria
shall be met by exposures transferred after the closing of the
transaction.
Art. 8(4)
1) In line with the conclusions drawn at the last WP, the notion
of “homogeneous” has been clarified by using the wording
contained in Recital (18). The wording also clarifies that a pool
cannot be a mixed pool of assets.
2) The wording limits the scope of transferable securities which
cannot be included in the underlying exposures to “transferable
securities listed on a trading venue” (within the meaning of
MiFID2).
Art. 8(5)
Amendment is for terminology coherence purposes.
Art. 8(6)
1) The wording clarifies timing issues;
2) Editorial change;
3) Clarification regarding underwriting standard in line with
Criterion 4 of the EBA Report on qualifying securitisation (page
54).
Art. 8(7)
Editorial change.
Art. 8(7)(a)
In line of concerns expressed at the WP, the wording has been
modified in order not to create an unlevel playing field for
specific MSs.
Art. 8(7)(b)
The wording is adapted to reflect the fact that not all MS have a
public or official register of persons with adverse credit history.
The condition in Art. 8(7)(b) shall be met at the time of
origination only as it is almost impossible to check this
requirement at the time of transfer to the SSPE for all exposures.
Art. 8(7)(c)
As the notion of “average debtor” is not an operational one for
all types of loans, it is proposed to insert a wording ensuring that
the criteria can be applied in all cases.
Art. 8(8)
The wording contains one clarification and aims at aligning the
Article with Criteria 5 of the EBA Report on qualifying
securitisation (page 56).
Art. 8(9)
Clarification requested by certain MS.
Art. 9 (1)
Editorial change.
Art. 9(2)
The wording clarifies that derivatives (whether exchange traded
derivatives or OTC derivatives) may not be entered into by the
SSPE, except for covering interest rate and currency mismatches.
Art. 9 (3)
Text added to ensure that any referenced interest payments
under the securitisation assets and liabilities shall be based on
generally used market interest rates or sectoral rates reflective
of the cost of funds.
Art. 9 (4) (a)
This amendment aims at clarifying the meaning of ‘no substantial
amount of cash’ as requested by certain MS.
Art. 9 (4) (b)
Text added for clarification.
Art. 9(6)
For clarity purposes, parts of Art. 9(6) have been moved to a new
Art. 9(6a).
Art. 9(6a)
New paragraph to stress the importance of the servicer’s
experience and the necessity of the servicer having policies in
place.
Art. 9(7)
The proposed amendments streamline and simplify the wording.
Art. 10(1)
1) The wording reflects the concern expressed that the data
should be made available to investors (or potential investors) at
the time of pricing (and not at the time of investing).
2) The wording also limits the data coverage for trade receivables
as trade receivables usually have a shorter maturity.
Art. 10 (2)
Text added to clarify ‘appropriate and independent party’.
Art. 10 (3)
As requested by MSs, text added to clarify that the originator or
sponsor may provide a liability cash flow model to investors
through third party specialist providers.
Art. 10 (4)
Editorial change.
Art. 11
Paragraph has been redrafted to reflect the splitting of the
requirements in the following articles. The second sub-paragraph
has been transferred from Art. 12(1)
Art. 12(1)
General comment: Paragraph has been redrafted to avoid the
enumeration of the articles, which are not applicable to ABCP. It
is proposed to import directly in the body of Article 12 those
articles of Section 1 which remain applicable to ABCP.
Art. 12(1a)
In line with Art. 8(1).
Art. 12(1b)
In line with Art. 8(2).
Art. 12(1c)
In line with Art. 8(3).
Art. 12(1d)
In line with Art. 8(5).
Art. 12(1e)
In line with Art. 8(7).
Art. 12(1f)
In line with Art. 8(8).
Art. 12(1g)
In line with Art. 8(9).
Art. 12(1h)
In line with Art. 9(2), except that for ABCP, this point concerns
only the sponsor (not the investors) and, hence, disclosure is not
necessary.
Art. 12(1i)
In line with Art. 9(7).
Art. 12(1j)
In line with Art. 10(1) subject to the ABCP specificities (role of the
sponsor).
Art. 12(2)
1) “homogeneous” is clarified in line with Art. 8(4);
2) for certain types of transactions, it is proposed to extend the
maturity. To be discussed.
Art. 12(3)
The wording reflects Criterion 9 of the EBA Report on qualifying
securitisation (page 77).
Art 12(4)
In line with Art. 9(4)(a).
Art. 12(5)
The wording is amended to delete the reference to residential
loans, as those loans are excluded from the set of eligible
underlying exposures.
Art. 12(6)
The amendment for the sake of clarification.
Art. 12(6)(c)
Point (c) is deleted as the provision was inspired by similar ABS
provisions, which cannot apply to ABCPs. For ABCPs the principle
is that sellers transfer receivables depending on their day-to-day
business. Certain businesses have a seasonality, and thus the
amount and quality of the underlying exposures of the ABCP vary
over time. Such a process is fairly normal and should not lead to
a termination of the revolving period since the SSPE only issues
securities where it receives exposures.
Art. 12(7)
In line with Art. 9(6) and (6a). Point (d) of last sub-paragraph is
transferred to new Art. 12a.
Art. 12a
General comment: New article to group provisions relating to the
sponsor of an ABCP programme.
Art. 12a(1)
The wording is taken from the former Art. 13(4).
Art. 12a(2)
The wording is taken from the former Art. 13(4). The wording
also imposes an obligation on sponsors to disclose a description
of the liquidity support provided. The wording also clarifies that
the support provided should be at programme level.
Art. 12a(3)
The wording is taken from Art. 12(7)(d) and Art. 14(2a)
Art. 12a(4)
In line with former Art. 13(2). The wording clarifies who is
responsible and at what level for the risk retention. Please note
that, according to article 11, “seller” means “originator” or
“original lender” and, hence, encompasses both entities.
Art. 12a(5)
1) The proposal is in line with the suggestion of certain MS to
place the responsibility in connection with Art. 5 (Transparency)
on the sponsor at an ABCP programme level. The suggestion is
based on the prominent role played by sponsors in ABCP
programmes and the importance for investors to have a clear
view on the liquidity facility and the responsibility of the sponsor.
2) Given the short maturity of the investments in ABCP
transactions, it has been specified that the information should be
made available to the investors “in a timely manner”.
Art. 12a(6)
This paragraph has been transferred from Art. 13(7)(f).
Art. 13(1)
It is proposed to insert some flexibility as regards the compliance
of the criteria on an ABCP programme level to ensure that, if a
small part of the transactions no longer fulfils the STS criteria,
this will not immediately disqualify the whole programme.
Threshold to be discussed.
Art. 13(2)
The paragraph has been transferred to Art. 12a(4).
Art. 13(2a)
The wording imposes that an ABCP programme be fully
supported by a sponsor.
Art. 13(3)
The wording clarifies that an ABCP programme cannot “be” a
securitisation or re-securitisation. An ABCP programme merely
“contain” (re-)securitisation transactions.
Art. 13(4)
The provision has been transferred to Art. 12a(1) and 12a(2).
Art. 13(5)
The wording clarifies that only investors in ABCP transactions
qualifying as STS have discretions in exercising the options.
Art. 13(6)
In line with Art. 9(2).
Art. 13(7)
1) The wording takes into account the fact that there is not a
trustee involved;
2) Art. 13(7) – the last sentence is transferred to Art. 12a(6).
Art. 13(7a)
New paragraph in line with Art. 9(6a) for the servicer.
Art. 13(8)
The substance of this requirement is now contained in Art.
12a(5).
Art. 14 (1) (Option 1)
As requested by certain MSs, the wording proposed imposes that
the STS notification includes a concise justification by the
originator, sponsor and SSPE regarding the compliance with each
of the STS criteria.
Art. 14 (2) (Option 1)
Clarification that the exemption only applies to EU institutions.
Art. 14 (2) (b) (Option 1)
Editorial change.
Art. 14 (5) (Option 1)
In order to provide for a swifter implementation of this provision,
it is proposed that ESMA shall draft an ITS instead of an RTS and
that it shall submit this draft ITS to the Commission by six month
after entry into force of the STS regulation.
Art. 14 (1) (Option 2)
Idem Art. 14 (1) (Option 1).
Art. 14 (1a) (Option 2)
Paragraph added to better frame the case where an independent
third party checks compliance with the STS criteria.
Art. 14 (2) (Option 2)
Idem Art. 14 (2) (Option 1).
Art. 14 (2) (b) (Option 2)
Editorial change.
Art. 14 (5) (Option 2)
Idem Art. 14 (5) (Option 1).
Art. 14a
The new Art 14a provides for an authorization procedure for
independent third parties checking compliance with the STS
criteria. This authorization could either be done by ESMA (Option
2A) or the competent authority designated under Art. 15 (4a)
(Option 2B).
Art. 14b
Article added to clarify the liability regime relating to STS
notifications.
Art. 15 (1) (b)
Text aligned to points (a) and (c) – (e).
Art. 15 (1) (e)
Text deleted in order to avoid legal uncertainty due to a
contrario readings of other legislative acts where there is no
explicit reference to the ECB. The ECBs empowerments as a
competent authority for banking supervision result directly from
the SSM regulation.
Art. 15 (2) and (3)
Text deleted in order to avoid legal uncertainty due to a
contrario readings of other legislative acts where there is no
explicit reference to the ECB. The ECBs empowerments as a
competent authority for banking supervision result directly from
the SSM regulation.
Art. 15 (4)
1) Text changed for clarification;
2) The amendment aims at avoiding unnecessary administrative
burden for MSs with respect to the notification of competent
authorities since ESMA is required to publish on its website a list
of competent authorities pursuant to paragraph 5;
3) Deadline added to the notification process.
Art. 15 (4a)
New paragraph 4a providing Member States the flexibility to
appoint only one or more competent authorities for supervisory
tasks related to STS securitisations.
Art. 15 (4b)
Following comments from Member States, new paragraph 4b
clarifying that e.g. SMEs or other corporates would not be
subject to direct supervision.
Art. 15 (5)
Text added for the sake of consistency.
Art. 16
References corrected and text added to provide more details on
the review to be conducted by competent authorities.
Art. 17 (1)
Text added to ensure that MS lay down rules establishing
administrative sanctions and remedial measures applicable ‘at
least’ to the situations specified in points (a) to (f), alignment to
CRD IV.
Art. 17 (1) (ba)
Text added to ensure that MS lay down rules establishing
administrative sanctions or remedial measures in case of a
breach of Art. 6.
Art. 17 (1) (d)
Text added to ensure that MS lay down rules establishing
administrative sanctions and remedial measure in case of a
breach of Art. 14 (2).
Art. 17 (1) (e)
Text added to ensure that MS lay down rules establishing
administrative sanctions and remedial measures in case of a
breach of Art. 14 (3).
Art. 17 (1) (f)
Text added to ensure that MS lay down rules establishing
administrative sanctions or remedial measures in case a third
party authorized pursuant to Art. 14a has failed to properly
check the compliance of the securitisation with STS criteria [only
relevant if OPTION 2 with respect to Art. 14 will be retained].
Art. 17 (2)
Clarification.
Art. 17 (2) (c)
Editorial change.
Art. 17 (2) (d)
1) Reference to point (ba) of paragraph 1 is inserted;
2) Text added for clarification.
Art. 17 (2) (e)
Alignment with UCITS V.
Art. 17 (2) (f)
Alignment with UCITS V.
Art. 17 (2) (g)
In line with point (e).
Art. 17 (2) (h)
Text added to ensure that in case of an infringement of Art. 17
(1) (f), the competent authority can temporarily withdraw the
authorization of the third party to check compliance of a
securitization with STS criteria [only relevant if OPTION 2 with
respect to Art. 14 will be retained].
Art. 17 (3)
The amendment clarifies that application of sanctions and
remedial measures on members of the management body is
optional and subject to conditions laid down in national law;
alignment with CRD IV and BSR.
Art. 17 (4)
Alignment of wording to wording used in other financial services
texts.
Art. 18 (1) (ba)
Alignment with CRD IV (Art. 64).
Art. 18 (2)
As requested by certain MS, the amendment ensures that
competent authorities when determining sanctions take into
account whether the infringement is intentional or results from a
factual error (cf. proportionality).
Art. 18 (2) (c)
Alignment with CRD IV (Art. 70)
Art. 18 (2) (f)
Editorial change.
Art. 18 (4)
The text is aligned to CRD IV and BSR.
Art. 21 (1a)
This amendment aims at further clarifying how CAs shall closely
coordinate their supervision.
Art. 21 (2)
Text deleted as unnecessary.
Art. 21 (3)
Text clarifies that where a CA is aware of an infringement, it shall
inform the CA of the entity suspected of such infringement.
Art. 21 (4)
Text added to ensure that the CA finding the infringement shall
notify without delay, the competent authority of the originator,
sponsor and SSPE, as well as ESMA, EBA and EIOPA of its findings.
Art. 21 (5a)
New paragraph 5a has been added to clarify that for cross-
border disagreements between CAs, CAs cooperate in order to
find a mutually acceptable solution.
Art. 21 (5b)
Text added to clarify which CA has the final say in case of
persistence of disagreement.
Art. 21 (5c)
Clarification of the binding mediation procedure.
Art. 21 (5d)
This paragraph has been adeed to ensure that during the
decision process, a securitisation appearing on the list
maintained by ESMA pursuant to Article 14 shall continue to be
considered as STS.
Art. 22
General comment: In line with CRD IV, the publication only
concerns administrative sanctions and not remedial measures.
Art. 22 (1)
Alignment with CRD IV.
Art. 22 (3)
Alignment with CRD IV and streamlining of the text.
Art. 22 (4)
In line with Art 22 (1).
Art. 22 (6)
Text aligned to (EU) N° 596/2014 (MAR).
Art. 22 (7)
Administrative simplification.
Art. 25 (1)
Text added for the sake of consistency.
Art. 27 (2)
Editorial change.
Art. 27 (3)
1) Cross-reference has been corrected;
2) Editorial change.
Art. 28 (2)
Text added for the sake of consistency.
Art. 28 (3):
Text added for clarification.
Art. 28 (4):
Cross-reference to CRR has been corrected.
Art. 29 (3):
Text added to ensure that the ESMA report will cover due
diligence and risk retention rules.
Art. 29a new:
Report and review clause with respect to STS synthetic
securitization.
Art. 30
Text added to specify that the report shall take into
consideration international developments in the area of
securitisation. An equivalence regime for STC/STS of third
countries could be considered in future.