Background
Article 7 of Regulation (EU) 2017/2402 of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation (the "Securitisation Regulation") imposes strict disclosure requirements on originators, sponsors and securitisation special purpose entities ("SSPEs") of securitisations.
Pursuant to Article 7(3) and (4) of the Securitisation Regulation the European Securities and Markets Authority ("ESMA") was mandated to produce draft regulatory technical standards ("RTS") and implementing technical standards ("ITS") in relation to the transparency requirements specifying what information must be disclosed and standardised templates for submitting that information.
Publication of RTS and ITS by European Commission
On 16 October 2019, the European Commission published on its website Commission delegated regulation with associated Annexes (based on drafts submitted by ESMA); and the Commission implementing regulation with associated Annexes (based on drafts submitted by ESMA).
The RTS specify the information to be made available for all securitisations namely underlying exposures in the securitisation (Article 2), investor reports (Article 3), inside information (Article 6), and significant events that affect the transaction (Article 7) and describe the granularity of the information to be disclosed. The document applies to both public and private securitisations, with the RTS drawing a distinction between what is required to be disclosed in each case.
The ITS clarify the format and lay down standardised templates for disclosing the information as required by the RTS. As an interim measure prior to the ITS becoming effective, issuers, originators and sponsors were allowed to refer to the draft disclosure templates from Regulation (EC) No.1060/2009 of 16 September 2009 on credit rating agencies. This will no longer be possible once the ITS enters into force.
Next Steps
The next stage in the process is a three-month extendable review period during which the European Parliament and the Council of the European Union may object and veto the RTS. The ITS per se are not subject to a
no-objection condition, but given their pure technical nature, they enter into force together with the RTS. Therefore, assuming there is no objection to the RTS in their current form, they, together with the ITS, will be published in the Official Journal and come into force 20 days after the date of such publication. It is anticipated that both the RTS and ITS will enter into force in February 2020.
No transitional period is expected to apply and therefore market participants are encouraged to prepare themselves so they are ready to comply with the new reporting requirements once the RTS and ITS become effective. The RTS will apply to all EU securitisation transactions that have closed since 1 January 2019 (when the Securitisation Regulation came into force).
