On 25 March, the EU Parliament adopted draft legislation on STS for synthetic and NPL securitisations under the Capital Market Recovery Package (CMRP). Only a few days later and before Easter, the pending approval of the EU ministers in the Council took place and the publication in the Official Journal took place with today’s date. Due to the shortened publication period to 3 days, these new securitisation rules will therefore already enter into force next Friday, 9 April 2021. The rules on the treatment of synthetic excess spread will not come into force until April 2022, as technical regulatory standards (RTS) still have to be developed by the EBA for this purpose.
The new securitisation rules give synthetic balance sheet securitisations access to the status of “simple, transparent and standardised” (“STS”), which was previously only available for “true sale” securitisations.
TSI welcomes the proposed changes as it will eliminate the current imbalance in terms of access to STS status between traditional “true sale” securitizations and synthetic securitizations.
Accordingly, the STS Verification International GmbH (SVI), a 100% subsidiary of True Sale International GmbH is already available to clients to discuss potential verification for specific synthetic securitizations with you. To this end, SVI has developed a new verification checklistscheme and introduced an amended fee schedule to reflect the specifics of on-balance sheet synthetic securitizations.
Both documents will become effective as soon as the competent authority (German Federal Financial Supervisory Authority, “BaFin”) has formally extended SVI’s approval as Third Party in accordance with Article 28 of the Securitization Regulation to include synthetic securitizationsin accordance with Article 28 of the Securitization Regulation. The application for extension was submitted with the decision of the EU Parliament on March 25, 2021 to the relevant competent authority.
Further background and the final texts on the amendments to the CRR and the Securitisation Regulation can be found here.