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EBA final draft technical standards on securitisation

EBA final draft technical standards on securitisation

On the 31st July 2018 the European Banking Authority (EBA) published the final draft of Regulatory Technical Standards (RTS) on the homogeneity of the underlying exposures in securitisation under Articles 20(14) and 24(21) of Regulation (EU) No 2017/2402 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised (STS) securitisation.

The RTS are part of 28 mandates assigned to the EBA within its important role in implementation of the new securitisation framework.

The application of the homogeneity requirement along with other STS requirements is a prerequisite for a more risk sensitive regulatory treatment of the securitisation, as established in the EU securitisation framework (i.e. Regulation (EU) No 2017/2402 and Regulation (EU) No 2017/2401).

Draft RTS establish the following conditions for the underlying exposures to be considered homogeneous: (i) they have been underwritten according to similar underwriting standards; (ii) they are serviced according to similar servicing procedures; (iii) they fall within the same asset category; (iv) and, for a majority of asset categories, they need to be homogeneous with reference to at least one homogeneity factor.

On the 31st July 2018 the EBA also published the final draft of RTS specifying the requirements for originators, sponsors and original lenders relating to risk retention pursuant to Article 6(7) of Regulation (EU) 2017/2402. These RTS should replace the current Commission Delegated Regulation on risk retention. These RTS address the possible misalignment of interests and incentives of the involved parties in securitisation transactions. RTS include various new provisions on one hand, on the other hand due to the narrower mandate on risk retention under the STS Regulation, certain provisions from the existing Delegated Regulation were not included.