Ireland: Securitisation Regulation Update: Addressing Challenges

Last Updated: 10 December 2018
Article by Cormac Kissane, Glenn Butt, Aiden Small, Maedhbh Clancy and Phil Cody

As mentioned in our recent briefings (What you need to know about the new EU Securitisation Regulation and Simple, Transparent and Standardised (STS) Securitisations: What you need to know), the new EU Securitisation Regulation comes into force on 1 January 2019.

Some recent implementation challenges have arisen, leading to last week's joint statement by the European Supervisory Authorities (ESAs).

New Disclosure Templates Unlikely to be Ready in Time – 'Cra3 Templates' will Apply for a Transitional Period

Quarterly Disclosure Requirements under the new Regulation

The creation of new securitisation positions after 1 January 2019 will trigger the application of new transparency requirements. Originators, sponsors and securitisation special purpose entities will be required to disclose detailed information to holders of securitisation positions, competent authorities and (upon request) potential investors. They must, between themselves, designate which of them will comply with the disclosure requirements. The disclosure requirements are more onerous than those currently contained in the Capital Requirements Regulation (CRRCRA III).

The disclosure requirements in Article 7 of the new Regulation are wide-ranging – only two are specifically impacted by the joint statement. Those are:

  • the requirement to report information on underlying exposures on a quarterly basis; and
  • the requirement to provide quarterly investor reports.

The other disclosure and transparency obligations in Article 7 are unaffected by the joint statement.

Status of Draft ESMA Templates

ESMA was required to draft technical standards containing disclosure templates for the above quarterly reports. ESMA's Final Report, containing its draft disclosure templates, is here, and is with the European Commission for approval. In that Final Report, ESMA noted the time and effort that would be involved for reporting entities in adopting the new disclosure templates, and suggested that they apply with "a gradually-increasing degree of compliance" over a 15-18 month period. The Commission has not yet confirmed whether it has comments on the draft templates, but a statement is expected from the Commission shortly.

It now seems very unlikely, as signposted in last week's joint statement by the ESAs, that agreement will be reached on those disclosure templates in time to have them ready for 1 January 2019.

Transitional Provisions will Apply

In light of this, the transitional provisions contemplated by the new Regulation will apply. Those transitional provisions require that the templates developed under CRA III be used to meet the quarterly reporting obligations until the new templates are ready. The CRA III templates cover reporting for structured finance instruments backed by residential mortgages, commercial mortgages, loans to SMEs, auto-loans, loans to consumers, credit card debt, and leases. They also set out a list of what should be included in investor reports. However, to date those templates have not been widely used, and their fields do not precisely match what needs to be reported under the new Regulation. Importantly, there is no specific CRA3 template for CLO reporting.

The ESAs noted that "severe operational challenges" have been highlighted by reporting entities that will need to use the CRA III templates – in particular, as some have never needed to use them. A requirement to temporarily use those templates before moving to the new templates (once agreed) could necessitate expensive adjustments to reporting systems.

The new Regulation is directly applicable across EU Member States. As such, the ESAs commented that neither they nor national competent authorities (NCAs) can decide to dis-apply its provisions. Changing the requirements of the new Regulation would require further EU legislative action.

So, to address the concerns of reporting entities, and while expressly not advocating a general forbearance approach, the ESAs have said that until such time as the ESMA draft disclosure templates are agreed, NCAs are expected to supervise and enforce the new disclosure rules "in a proportionate and risk-based manner." For example, when checking whether a reporting entity is complying with the disclosure element of the new transparency requirements, the ESAs expect the NCAs to take account of the "type and extent of information already being disclosed" by them, on a case-by-case basis.

What this Means in Practice

In practice, this means that, for securitisations where there is a CRA3 template, the safest option is for that template to be used until such time as ESMA's new templates are agreed with the Commission. However, as NCAs will have scope to assess reporting compliance on a case-by-case basis, NCAs may be prepared to allow securitisations to be reported in different formats, provided that the information that would otherwise be captured by the most relevant CRA3 template forms part of that reporting. It would be sensible for a reporting entity proposing to use a non-CRA3 template to confirm this with its NCA in advance. For securitisations for which there isn't a CRA3 template at the moment (such as CLOs), it will be up to the NCA to decide what form of reporting should be used, having regard to the ESA requirement that they do so "in a proportionate and risk-based manner" – existing reporting undertaken in respect of such securitisations may be the most appropriate starting point.

Challenges for Bank Subsidiaries

Separately, some amendments made to the CRR in parallel with the new Regulation have caused concern for subsidiaries of EU banks engaged in securitisation in third countries. Under Article 14 of the CRR (as it will be from 1 January 2019) the provisions of the new Regulation relating to due diligence, risk retention, transparency, re-securitisation and criteria for credit-granting will apply on a consolidated basis, bringing those subsidiaries (possibly unintentionally) into scope. The ESAs have received feedback that the new rules on risk retention and transparency will be particularly challenging for those entities.

Again, the ESAs have said that they expect the NCAs to apply their supervisory powers in enforcing this aspect of the new regime in a proportionate manner, assessing each situation on a case-by-case basis. NCAs are allowed take account of further proposed changes to the CRR (negotiations are ongoing at EU level), which are likely to see the scope of Article 14 of the CRR pared back somewhat to capture only the due diligence obligations under the new EU Securitisation Regulation. This should address the key concerns of those banking subsidiaries, but those changes will not become law for some time yet.

Next Steps

Reporting entities should engage with their NCA regarding how best to manage compliance with the transitional quarterly reporting obligations. If you would like to discuss this, or any aspect of the new Securitisation Regulation, further, please contact any member of our team.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions