Top Points- EBA technical advice on Qualifying Securitisations

In 2014 the European Commission had requested the EBA to advise on criteria for identifying a prudentially sound securitisation market and its regulatory treatment. In return, on the 26 June 2015, the EBA held a public hearing event to consult the industry on proposals for its technical advice on qualifying securitisations.

 Andrea Enria (Chairperson of the EBA) gave an introductory statement summarising the main provisions to be included in the proposal and stated that the EBA fully supports an assessment of the regulatory securitisation framework, which is also important in light of the Commission's effort to create a Capital Markets Union. Mr Enria also stated that the EBA is looking to ensure an appropriate prudential treatment for qualifying securitisation in order to revive what he called, a ‘highly stigmatized market’’.

 The EBA recommendations on securitisation define a series of criteria to help identify simple standard and transparent term securitisation and asset-backed commercial paper transactions. One of the main points is that capital charges anticipated by the 2014 Basel securitisation framework can be lowered for qualifying securitisations in order to reflect their relative lower level of risk. The EBA viewpoint specifies the conditions under which transactions could qualify for a differentiated treatment within this new international framework.

 The EBA is preparing to publish the technical guidance and guidelines in early July 2015.

 The related documents to the EBA advice on criteria and capital treatment for securitisation event can be found here.