EBA publishes final guidelines on the STS criteria in securitisation

12 December 2018

On 12 December 2018, the European Banking Authority (EBA) published its final Guidelines, which will provide a harmonised interpretation of the criteria for the securitisation to be eligible as simple, transparent and standardised (STS) on a cross-sectoral basis throughout the Union. These Guidelines will play a crucial role in the new EU securitisation framework that becomes applicable on 1 January 2019, by providing a single point of consistent interpretation of the STS criteria for all entities involved in the STS securitisation including originators, sponsors, investors, competent authorities and third party STS verifiers.

The Guidelines, developed for both non asset-backed commercial paper (ABCP) and ABCP securitisation, clarify and ensure a common understanding of all the STS criteria, including those related to the expertise of the originator and servicer, the underwriting of standards, exposures in default and credit impaired debtors, and predominant reliance on the sale of assets.

The Guidelines will be applied on a cross-sectoral basis throughout the Union with the aim of facilitating the adoption of the STS criteria, which is one of prerequisites for the application of a more risk-sensitive regulatory treatment under the new EU securitisation framework.

The Guidelines are an important building block in a set of initiatives that aim to destigmatise and revive a sound securitisation market in the EU, and facilitate further lending to the real economy in line with the objectives of the Capital Market Union.

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