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+++ News +++ STS  label for synthetic securitisations on its way +++


On March 25, 2021, the EU Parliament adopted the draft legislation on STS for synthetic and NPL securitisations submitted as part of the Capital Market Recovery Package (CMRP). These include as a key element that synthetic securitisations can also access the STS label in a "simple, transparent and standardized" manner. The adjustments to Regulation EU 2017/2402 (Securitisation Regulation) serve as a supportive measure in the COVID-19 crisis.

After the vote in the parliament, both texts have already been approved by the EU ministers in the Council and published in the Official Journal on 6 April 2021. As the new STS Regulation and the CRR amendment will then apply within 3 days of their publication in the Official Journal, they will come into force on 9 April 2021 already. Background information and legal texts also available on the TSI website.

 

SVI extends verification to synthetic securitisations

 

STS Verification International GmbH welcomes the changes as they will eliminate the current imbalance in terms of access to STS status between traditional "true sale" securitisations and synthetic securitisations. Accordingly, we are already available to our clients to discuss the verification of specific synthetic securitisations.

To this end, SVI has developed a new verification report template and introduced an amended fee schedule to reflect the specifics of on-balance sheet synthetic securitisations.

 

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 Securitisation Regulation to include synthetic securitisations. The application for extension is currently under review by Bafin.

 

The STS review of synthetic on-balance sheet securitisations will complement SVI's existing service for the STS review of "traditional" non-ABCP and ABCP securitisations, as well as additional services such as the provision of so-called CRR assessments, Article 270 assessments, LCR assessments and gap analyses.

Independent STS third party verifier

STS Verification International GmbH (SVI) is a STS third party verifier licensed since 7 March 2019 in accordance with Article 28 of the Securitisation Regulation*. In a first step, BaFin's approval covered the asset classes auto loans and auto leasing, consumer loans and equipment leasing as well as the ABS transaction type.

This approval was expanded by BaFin on 11 July 2019, making SVI an approved STS third party verifier for all asset classes for all countries of the European Union (EU). It verifies compliance with the STS criteria pursuant to Articles 18-26 of the Securitisation Regulation for the transaction types non-ABCP and ABCP.

Moreover, SVI performs Additional Services including

  • CRR assessments
  • LCR assessments
  • Article 270 assessments and
  • gap analyses

These Additional Services are carried out after notification to and in agreement with BaFin

More details on these Additional Services

*‘REGULATION (EU) 2017/2402 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012’, as amended and hereinafter referred to as the ‘Securitisation Regulation'.