Activities of Notis MARIAS related to 2015/0226(COD)
Plenary speeches (1)
Framework for simple, transparent and standardised securitisation - Prudential requirements for credit institutions and investment firms (debate) EL
Amendments (14)
Amendment 110 #
Proposal for a regulation
Recital 1
Recital 1
(1) Securitisation involves transactions that enable a lender – typically a credit institution – to refinance a set of loans or exposures such as loans for immovable property, auto leases, consumer loans or credit cards, by transforming them into tradable securities. The lender pools and repackages a portfolio of its loans, and organises them into different risk categories for different investors, thus giving investors access to investments in loans and other exposures to which they normally would not have direct access. Returns to investors are generated from the cash flows of the underlying loans. At the same time, the lender strengthens its liquidity level through the securitisation procedure.
Amendment 112 #
Proposal for a regulation
Recital 2
Recital 2
(2) In the Investment Plan for Europe presented on 26 November 2014, the Commission announced its intention to restart high quality securitisation markets, without repeating the mistakes made before the 2008 financial crisis. The development of a simple, transparent and standardised securitisation market constitutes a building block of the Capital Markets Union (CMU) and must contributes to the Commission's priority objective to supporting job creation and a return to sustainable growth.
Amendment 115 #
Proposal for a regulation
Recital 3
Recital 3
(3) The European Union does not intent to weaken the legislative framework implemented after the financial crisis to address the risks inherent in highly complex, opaque and risky securitisation. It is essential to ensure that rules are adopted to better differentiate simple, transparent and standardised products from complex, opaque and risky financial instruments and apply a more risk-sensitive prudential framework.
Amendment 120 #
Proposal for a regulation
Recital 4
Recital 4
(4) Securitisation is an important element of well-functioning financial markets and helps to improve the financing of the economy. Soundly structured securitisation is an important channel for diversifying funding sources and allocating risk more efficiently within the Union financial system. It allows for a broader distribution of financial sector risk and can help to free up originator's balance sheets to allow for further lending to the economy. Overall, it can improve efficiencies in the financial system and provide additional investment opportunities. Securitisation can create a bridge between credit institutions and capital markets with an indirect benefit for businesses and citizens (through, for example, less expensive loans and business financing, credits for immovable property and credit cards).
Amendment 124 #
Proposal for a regulation
Recital 5
Recital 5
(5) Establishing a more risk-sensitive prudential framework for simple, transparent and standardised ("STS") securitisations requires that the Union clearly defines what a STS securitisation is, since otherwise the more risk-sensitive regulatory treatment for credit institutions and insurance companies would be available for different types of securitisations in different Member States. This would lead to an un-level playing field and to regulatory arbitrage. Otherwise, many securitisations would not be sufficiently risk-sensitive, owing to the lack of suitable risk drivers across approaches in determining risk weights.
Amendment 128 #
Proposal for a regulation
Recital 7
Recital 7
(7) At both the international and European level, muchore work has alreadymust been done to identify STS securitisation and, just as in Commission Delegated Regulations (EU) 2015/6122 and (EU) 2015/3523, criteria have already been set out for simple, transparent and standardised securitisation for specific purposes, to which a more risk sensitive prudential treatment is attached. __________________ 22 Commission Delegated Regulation of 10 October 2014 to supplement Regulation (EU) No 575/2013 with regard to liquidity coverage requirement for Credit Institutions (OJ L 11, 17.1.2015, p. 1). 23 Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 12, 17.1.2015, p. 1).
Amendment 129 #
Proposal for a regulation
Recital 8
Recital 8
(8) Based on the existing criteria, on the BCBS-IOSCO criteria adopted on 23 July 2015 for identifying simple, transparent and comparable securitisations, in the framework of capital sufficiency for securitisations, and in particular the EBA Advice on qualifying securitisation published on 7 July 2015, it is essential to establish a general and cross-sectorally applicable definition of STS securitisation.
Amendment 130 #
Proposal for a regulation
Recital 9
Recital 9
(9) Implementation of the "STS” criteria throughout the EU should not lead to divergent approaches but, instead, to the development of a safe securitisation market. Those approaches would create potential barriers for cross- border investors by constraining them to enter into the details of the Member State frameworks and thus undermining investor confidence in the STS criteria.
Amendment 140 #
Proposal for a regulation
Recital 12
Recital 12
(12) It is importantessential that the interests of originators, sponsors and original lenders that transform exposures into tradable securities and investors are aligned. To achieve this, the originator, sponsor or original lender should retain a significant interest in the underlying exposures of the securitisation. It is therefore important for the originators or the sponsors to retain a material net economic exposure to the underlying risks in question. More generally, securitisation transactions should not be structured in such a way so as to avoid the application of the retention requirement. That requirement should be applicable in all situations where the economic substance of a securitisation is applicable, whatever legal structures or instruments are used. There is no need for multiple applications of the retention requirement. For any given securitisation, it suffices that only the originator, the sponsor or the original lender is subject to the requirement. Similarly, where securitisation transactions contain other securitisations positions as underlying exposures, the retention requirement should be applied only to the securitisation which is subject to the investment. The STS notification indicate to investors that originators are retaining a material net economic exposure to the underlying risks. Certain exceptions should be made for cases when securitised exposures are fully, unconditionally and irrevocably guaranteed by in particular public authorities. In case support from public resources provided in the form of guarantees or by other means, any provisions in this Regulation are without prejudice to State aid rules.
Amendment 145 #
Proposal for a regulation
Recital 13
Recital 13
(13) The ability of investors to exercise due diligence and thus make an informed assessment of the creditworthiness of a given securitisation instrument depends on their access to information on those instruments. Based on the existing acquis, it is important to create a comprehensive system under which investors will have access to all the relevant information over the entire life of the transactions and to reduce originators, sponsors and SSPEs reporting tasks and to facilitate investors’ continuous; easy and free access to reliable information on securitisations.
Amendment 148 #
Proposal for a regulation
Recital 14
Recital 14
(14) OTo provide security for investors, originators, sponsors and SSPE's should make all materially relevant data on the credit quality and performance of underlying exposures available in the investor report, including data allowing investors to clearly identify delinquency and default of underlying debtors, debt restructuring, debt forgiveness, forbearance, repurchases, payment holidays, losses, charge offs, recoveries and other asset performance remedies in the pool of underlying exposures. Data on the cash flows generated by underlying exposures and by the liabilities of the securitisation issuance, including separate disclosure of the securitisation position’s income and disbursements, that is scheduled principal, scheduled interest, prepaid principal, past due interest and fees and charges and any data relating to the breach of any triggers implying changes in the priority of payments or replacement of any counterparties as well as data on the amount and form of credit enhancement available to each tranche should also be made available in the investor report. Although securitisations that are simple, transparent and standardised have in the past performed well, the satisfaction of any STS requirements does not mean that the securitisation position is free of risks, nor does it indicate anything about the credit quality underlying the securitisation. Instead, it should be understood to indicate that a prudent and diligent investor will be able to analyse the risks involved in the securitisation. There should be two types of STS requirements: one for long-term securitisations and one for short-term securitisations (ABCP), which should be subject to a large extent to similar requirements with specific adjustments to reflect the structural features of these two market segments. The functioning of these markets are different with ABCP programmes relying on a number of ABCP transactions consisting of short term exposures which need to be replaced once matured. In addition, STS criteria need also to reflect the specific role of the sponsor providing liquidity support to the ABCP conduits.
Amendment 157 #
Proposal for a regulation
Recital 19
Recital 19
(19) It is essential to prevent the recurrence of purely ‘originate to distribute’ models. In those situations lenders grant credits applying poor and weak underwriting policies as they know in advance that related risks are eventually sold to third parties. Thus, the exposures to be securitised should be originated in the ordinary course of the originator’s or original lender's business pursuant to underwriting standards that should not be less stringent thanbe the same as those the originator or original lender applies to origination of similar exposures which are not securitised. Material changes in underwriting standards should be fully disclosed to potential investors. The originator’s or original lender should have sufficient experience in originating exposures of a similar nature to those which have been securitised. In the case of securitisations where the underlying exposures are residential loans, the pool of loans should not include any loan that was marketed and underwritten on the premise that the loan applicant or, where applicable intermediaries, were made aware that the information provided might not be verified by the lender. The assessment of the borrower's creditworthiness should also meet where applicable, the requirements set out in Directives 2014/17/EU or 2008/48/EC of the European Parliament and of the Council or equivalent requirements in third countries.
Amendment 160 #
Proposal for a regulation
Recital 20
Recital 20
(20) Where originators, sponsors and SSPE's would like their securitisations to use the STS designation, they should notify investors, competent authorities and ESMA that the securitisation meets the STS requirements. ESMA should then publish it on a list of transactions made available on its website for information purposes. The inclusion of a securitisation issuance in ESMA’s list of notified STS securitisations does not imply that ESMA or other competent authorities have certified that the securitisation meets the STS requirements. The compliance with the STS requirements remains solely the responsibility of the originators, sponsors and SSPEs. This will ensure that originators, sponsors and SSPE's take responsibility for their claim that the securitisation is STS and that there is transparency on the market, so as to protect investors and prevent the recurrence of the misguided ‘originate to distribute’ models.
Amendment 170 #
Proposal for a regulation
Recital 24
Recital 24
(24) Member States should designate competent authorities and provideassist them within the necessary supervisory, investigative and sanctioning powers. Administrative sanctions and remedial measures should, in principle, be published. Since investors, originators, sponsors, original lenders and SSPEs can be established in different Member States and supervised by different sectoral competent authorities close cooperation between relevant competent authorities, including the European Central Bank (ECB) in accordance with Council Regulation (EU) No 1024/2013 24, and with the ESAs should be ensured by the mutual exchange of information and assistance in supervisory activities. __________________ 24 Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013. p. 263).