ESMA Q&A

On 27 May 2019, the European Securities and Markets Authority (ESMA) published an updated version of its question and answer document (Q&A) on Regulation 2017/2402 (the Securitisation Regulation). The stated purpose of this Q&A is to “promote common, uniform and consistent supervisory approaches and practices in the day-to-day application of the Securitisation Regulation.

The updated Q&A can be accessed here.

RTS on the homogeneity of the underlying exposures in securitisation

On 28 May 2019, the European Commission published a Commission delegated regulation supplementing the Securitisation Regulation with regards to Regulatory Technical Standards (RTS) on the homogeneity of the underlying exposures in securitisation. Homogeneity is one of the fundamental simplicity criteria for Simple, Transparent and Standardised (STS) securitisation transactions, with the aim of facilitating the assessment of underlying risks for investors. Given the ambiguity of the term ‘homogenous’ in the Securitisation Regulation, the RTS have been developed to provide clarity on how underlying exposures in a transaction are deemed to be homogeneous.

The Securitisation Regulation’s overarching objective of homogeneity intends to enable investors to assess the underlying risks of the pool of the underlying exposures on the basis of common methodologies and parameters. On this basis, the technical standards establish a number of conditions for the underlying exposures to be considered homogeneous namely:

  1. they have been underwritten according to similar underwriting standards;
  2. they have to be serviced according to similar servicing procedures;
  3. they must fall within the same asset type; and
  4. for a majority of asset types, they need to be homogeneous with reference to at least one homogeneity factor.

The RTS on the homogeneity of the underlying exposures in securitisation can be accessed here.

Other RTS

The Regulatory Technical Standards on the homogeneity of the underlying exposures in securitisation are the second delegated regulation supplementing the Securitisation Regulation; the first being Regulatory Technical Standards specifying information to be provided to a competent authority in an application for authorisation of a third party assessing STS compliance, published by the Commission in February 2019.

The RTS specifying information to be provided to a competent authority in an application for authorisation of a third party assessing STS compliance can be accessed here.

The annexes to the RTS specifying information to be provided to a competent authority in an application for authorisation of a third party assessing STS compliance can be accessed here.

The Securitisation Regulation can be accessed here.