On August 22, 2018, the European Securities and Markets Authority published a final report and technical standards on the disclosure and reporting requirements under the EU Securitization Regulation (or STS Regulation). The Securitization Regulation requires originators and sponsors to notify ESMA of any securitization that meets the "Simple, Transparent and Standardized" criteria. ESMA will maintain a list of all such securitizations on its website. Securitization special purpose entities, originators and sponsors of a securitization will be required to make certain information available via a securitization repository to holders of a securitization position, to the national regulators and, upon request, to potential investors. The Securitization Regulation will apply directly across the EU from January 1, 2019 to securities issued under securitizations on or after January 1, 2019. Securitizations issued before that date may be referred to as STS securitizations provided that they meet certain conditions.
ESMA's final report outlines the feedback to ESMA's consultation on proposed draft technical standards conducted earlier this year as well as ESMA's responses to the feedback. ESMA notes the majority of support for its proposed approach and highlights areas where there were significant concerns, in particular, relating to the scope of the requirements, the time needed to implement the reporting requirements and the transitional requirements. Respondents voiced concerns over a lack of certainty as to the scope of the disclosure and reporting obligations, in particular, whether these requirements apply to private and public securitizations. ESMA states that its view is that: (i) the disclosure requirements relating to underlying exposures and the requirement to provide investor reports apply to all securitizations; and (ii) the requirements to report information to a securitization repository apply only to public securitizations.
Regarding timing, ESMA received feedback arguing that market participants would need sufficient time to adapt to the reporting requirements and that the technical standards should be adopted as soon as possible to provide certainty as to the requirements. ESMA has therefore re-prioritized its work to publish the final draft technical standards sooner than required by the Securitization Regulation. ESMA also considers that these reporting requirements would potentially be gradually implemented over a 15 to 18-month period.
Finally, ESMA clarifies that the reporting entity designated with responsibility for satisfying the transparency obligations should also be responsible for creating unique identifiers so that information can be tracked across a securitization.
The report sets out the final draft Regulatory Technical Standards and Implementing Technical Standards. These have been submitted to the European Commission for endorsement. The XML schema for the reporting templates are yet to be made available.
The ESMA report and final draft technical standards are available at: https://www.esma.europa.eu/press-news/esma-news/esma-defines-disclosure-standards-under-securitisation-regulation.
The ESMA consultation on the draft technical on the draft technical standards is available at: https://finreg.shearman.com/european-securities-and-markets-authority-launch.
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