It has been a busy few weeks for new regulatory developments in the European securitisation space.
On your marks, get set, go!: Securitisation Regulation disclosure templates finally get out of the blocks...
Following on from the European Commission's recently announced Covid-19 Capital Markets Recovery Package, the long awaited Commission Delegated Regulations and Commission Implementing Regulations setting out regulatory technical standards (RTS) and implementing technical standards (ITS) for a number of key areas relating to the EU Securitisation Regulation (SR) have also been published in the Official Journal of the European Union today (3 Sept). These include standards on transparency requirements, the form and content of disclosure templates and STS notification requirements.
The full impact of the new RTS and ITS (including the new disclosure templates) will take effect 20 calendar days after publication, being 23 September 2020. The applicable underlying exposure and investor level reporting templates annexed to the RTS will need to be used from that date onwards in accordance with Article 7 of SR as the transitional period for the use of CRA-3 reporting templates will expire. ESMA have previously confirmed that reporting entities are not required to re-report previously reported information using the new disclosure templates.
The vast majority of industry participants have already managed to get their house in order for the switchover but some issuers, originators and sponsors have more work to do to ensure a smooth transition to the new regime which will be welcomed by the market following a period of relative uncertainty.
Capital Markets Union - Back on the Agenda
Following on from the recommendations in the Final Report of the High Level Forum on the CMU , the ECB has also launched a blog emphasising that Europe needs to make rapid progress on implementing a fully-fledged capital markets union (CMU) in order to, among other things, create easier access to markets as an alternative to bank financing, increase private risk-sharing, mitigate re-fragmentation within the euro area financial markets and to facilitate trading in impaired assets in a post-Covid-19 world.
The ECB comments that public financing cannot solely carry the burden of supporting a post-Covid-19 EU economic recovery; the CMU is needed to help create a more integrated framework for private financing in order to make the EU economy more robust and resilient. The European Commission's CMU Action Plan is eagerly awaited later this year as the next major milestone for the CMU project.
Lots of progress but there is still much more to do.
"The impact of the COVID-19 outbreak will last for years. The recovery will be very challenging. A well designed Capital Markets Union that is a true single market for capital, can not only speed up recovery, but also minimise the transitional costs, improve financial stability and maintain essential investment flows throughout the EU economy benefitting citizens and business" - High Level Forum on the CMU