Changes from report parliamentary committee draft to plenary report

Added(31) Since the objectives of this Regulation cannot be sufficiently achieved by the Member States given that securitisation markets operate globally and that a level playing field in the internal market for all institutional investors and entities involved in securitisation should be ensured but, by reason of their scale and effects, can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

Change 2

Changed(32) Regulation (EU) 2017/2402 should therefore be amended accordingly,

Change 3

RemovedArticle 1 – paragraph 1 – point 8 – point -a (new), Article 20 – paragraph 1: (-a) paragraph 1 is replaced by the following: / ‘1. The title to the underlying exposures shall be acquired by the buyer of the underlying exposures by means of a true sale or assignment or transfer with the same legal effect in a manner that is enforceable against the seller or any other third party. The transfer of the title to the buyer of the underlying exposures shall not be subject to severe clawback provisions in the event of the seller’s insolvency.

AddedRegulation (EU) 2017/2402 is amended as follows:

Removed(Regulation (EU) 2017/2402)

Added(1) in Article 1, paragraph 2 is replaced by the following:

RemovedSecuritisations should be allowed to obtain the STS label even when no SSPE is used. Banks can buy receivables directly onto their own balance sheet and still structure the deal like a traditional ABS with tranching, without adding risk. These direct structures offer legal protection, avoid extra insolvency risk, reduce operational costs, and align with the EU goal of lowering red tape.

Added‘This Regulation applies to institutional investors and to originators, sponsors, original lenders, servicers and securitisation special purpose entities.

RemovedRegulation (EU) 2017/2402

Added(2) ▌Article 2 is amended as follows:

RemovedArticle 1 – paragraph 1 – point 8 – point a, Article 20 – paragraph 8 – subparagraph 4: For the purposes of the first subparagraph, underlying exposures shall be deemed to be homogeneous if they correspond to one of the following asset types: / (a) residential loans that are either secured by one or more mortgages on residential immovable property or that are fully guaranteed by an eligible protection provider among those referred to in Article 201(1) of Regulation (EU) No 575/2013 and qualifying for the credit quality step 2 or above as set out in Part Three, Title II, Chapter 2 of that Regulation; / (b) commercial loans that are secured by one or more mortgages on commercial immovable property, including offices or other commercial premises; / (c) credit facilities provided to individuals for personal, family or household consumption purposes, and credit facilities provided to enterprises where the originator applies the same credit risk assessment approach as for individuals not covered under points (a) and (b) and points (d) to (h); / (d) credit facilities, including loans and leases, provided to any type of enterprise or corporation; / (e) auto loans and leases; / (f) credit card receivables; / (g) trade receivables; / (h) other underlying exposures that are considered by the originator or sponsor to constitute a distinct asset type on the basis of internal methodologies and parameters;

Added(a) in point (1), the introductory wording is replaced by the following:

RemovedIncorporating the definition of homogeneity into the Level 1 text and deleting the EBA RTS would simplify the framework by reducing the homogeneity test to a single asset-class criterion, thereby removing unnecessary complexity and allowing similar loan types to be pooled more efficiently.

Added‘(1) ‘securitisation’ means a transaction or scheme whereby the credit risk associated with an underlying exposure or a pool of underlying exposures is tranched, having all of the following characteristics:’;

RemovedRegulation (EU) 2017/2402

Added(b) the following points ▌ are added:

RemovedArticle 1 – paragraph 1 – point 8 – point b a (new), Article 20 – paragraph 14: (ba) paragraph 14 is deleted;

Added‘(32) ‘public securitisation’ means a securitisation that meets any of the following criteria:

Removed(Regulation (EU) 2017/2402)

Added(a) ▌ a prospectus has to be drawn up for that securitisation pursuant to Article 3 of Regulation (EU) 2017/1129 of the European Parliament and of the Council;

RemovedRegulation (EU) 2017/2402

Added(b) the underlying pool of exposures is actively managed by the originator or sponsor;’;

RemovedArticle 1 – paragraph 1 – point 8 a (new), Article 21 – paragraph 6 – points c and d: (8a) in Article 21(6), points (c) and (d) are deleted;

Added▌

Removed(Regulation (EU) 2017/2402)

Added(32a) ‘actively managed’ means portfolio management that is directly related to the replacement of underlying exposures transferred or assigned to the SSPE, involving sale of the underlying exposures for reasons other than those listed in the case of excluded techniques, or any type of active selection of the underlying exposures on a discretionary basis not related to the sale of underlying exposures, including management of the underlying exposures for speculative purposes aiming to achieve better performance or increased investor yield, while excluding the following portfolio management techniques:

RemovedExcluding these triggers for private transactions would simplify the framework and remove provisions that are difficult to define or unsuitable for fluctuating exposures. Existing triggers for credit-quality deterioration and originator or servicer insolvency continue to protect investors, while this approach allows flexibility for cyclical industries and aligns non-ABCP STS criteria with ABCP practices.

Added(a) substitution or repurchase of underlying exposures due to the breach of representations or warranties;

RemovedRegulation (EU) 2017/2402

Added(b) replenishment of underlying exposures, that is, the addition of underlying exposures as substitute for amortised exposures during the revolving period;

RemovedArticle 1 – paragraph 1 – point 9 – point -a (new), Article 22 – paragraph 1: (-a) paragraph 1 is replaced by the following: / ‘1. The originator and the sponsor shall make available data on static and dynamic historical default and loss performance, such as delinquency and default data, or other adequate data that allow for a proper assessment of the risk, for substantially similar exposures to those being securitised, and the sources of those data and the basis for claiming similarity, to potential investors before pricing. Those data shall cover a period of at least five years.’

Added(c) use of a ‘ramp up’ period following the transfer of the underlying exposures to the SSPE, during which the proceeds from the underlying exposures are invested into additional exposures to line up the value of the underlying exposures with the value of the securitisation obligations;

Removed(Regulation (EU) 2017/2402)

Added(33) ‘private securitisation’ means a securitisation that is not a public securitisation;

RemovedTo meet transparency requirements, originators are required to provide data on historical default and loss performance to potential investors. In practice, it is often unclear which specific data should be disclosed. The amendment clarifies that the originator may select relevant information based on factors specific to the business and transaction, removing ambiguities and ensuring investors receive targeted and meaningful data.

Added(33a)‘repeat transactions’ mean a sequence of securitisation transactions that fulfil all of the following criteria:

RemovedRegulation (EU) 2017/2402

Added(a) they have the same originator or original lender;

RemovedArticle 1 – paragraph 1 – point 10 – point -a (new), Article 24 – paragraph 1: (-a) paragraph 1 is replaced by the following: / ‘1. The title to the underlying exposures shall be acquired by the buyer of the underlying exposures by means of a true sale or assignment or transfer with the same legal effect in a manner that is enforceable against the seller or any other third party. The transfer of the title to the buyer of the underlying exposures shall not be subject to severe clawback provisions in the event of the seller’s insolvency.’

Added(b) they are backed by the same type of underlying assets;

Removed(Regulation (EU) 2017/2402)

Added(c) they display the same overall structural features, notably concerning the number and hierarchy of tranches, credit enhancement mechanisms and cash flow distribution;

RemovedSecuritisations should be allowed to obtain the STS label even when no SSPE is used. Banks can buy receivables directly onto their own balance sheet and still structure the deal like a traditional ABS with tranching, without adding risk. These direct structures offer legal protection, avoid extra insolvency risk, reduce operational costs, and align with the EU goal of lowering red tape.

Added(d) they are presented to the market as a repeated and programmatic issuance with a similar name.’;

RemovedRegulation (EU) 2017/2402

Added(3) Article 5 is amended as follows:

RemovedArticle 1 – paragraph 1 – point 10 – point a a(new), Article 24 – paragraph 14: (aa) paragraph 14 is replaced by the following: / ‘14. The originator and the sponsor shall make available data on static and dynamic historical default and loss performance, such as delinquency and default data, or other adequate data that allow for a proper assessment of the risk, for substantially similar exposures to those being securitised, and the sources of those data and the basis for claiming similarity, to potential investors before pricing. Where the sponsor does not have access to such data, it shall obtain from the seller access to data, on a static or dynamic basis, on the historical performance, such as delinquency and default data, for exposures substantially similar to those being securitised. All such data shall cover a period no shorter than five years, except for data relating to trade receivables and other short-term receivables, for which the historical period shall be no shorter than three years.’

Added(a) paragraph 1 is amended as follows:

Removed(Regulation (EU) 2017/2402)

Added(-i) the introductory wording and points (a), (b) and (c) are replaced by the following:

RemovedTo meet transparency requirements, originators are required to provide data on historical default and loss performance to potential investors. In practice, it is often unclear which specific data should be disclosed. The amendment clarifies that the originator may select relevant information based on factors specific to the business and transaction, removing ambiguities and ensuring investors receive targeted and meaningful data.

Added‘1. Prior to holding a securitisation position, institutional investors, other than the originator, sponsor or original lender, shall verify that:

RemovedRegulation (EU) 2017/2402

Added(a) where the originator or original lender established in the Union is not a credit institution or an investment firm as defined in Article 4(1), points (1) and (2), of Regulation (EU) No 575/2013, the originator or original lender grants all the credits giving rise to the underlying exposures, or generates trade receivables, on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits or trade receivables and has effective systems in place to apply those criteria and processes in accordance with Article 9(1) of this Regulation;

RemovedArticle 1 – paragraph 1 – point 10 – point b – point i (new), Article 24 – paragraph 15 – subparagraph 2: (b) paragraph 15 is amended as follows: / (i) the second subparagraph is deleted;

Added(b) where the originator or original lender is established in a third country, the originator or original lender grants all the credits giving rise to the underlying exposures, or generates trade receivables, on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits or trade receivables and has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligor’s creditworthiness;

RemovedRegulation (EU) 2017/2402

Added(c) with regard to a securitisation notified as STS in accordance with Article 27, the compliance of that securitisation with Articles 19 to 22 or Articles 23 to 26 or Articles 26a to 26e, and Article 27;’;

RemovedArticle 1 – paragraph 1 – point 10 – point b – point ii (new), Article 24 – paragraph 15 – subparagraph 5: (ii) the following subparagraph is added: / For the purposes of the first subparagraph, underlying exposures shall be deemed to be homogeneous if they correspond to one of the following asset types: / (a) residential loans that are either secured by one or more mortgages on residential immovable property or that are fully guaranteed by an eligible protection provider among those referred to in Article 201(1) of Regulation (EU) No 575/2013 and qualifying for the credit quality step 2 or above as set out in Part Three, Title II, Chapter 2 of that Regulation; / (b) commercial loans that are secured by one or more mortgages on commercial immovable property, including offices or other commercial premises; / (c) credit facilities provided to individuals for personal, family or household consumption purposes, and credit facilities provided to enterprises where the originator applies the same credit risk assessment approach as for individuals not covered under points (a) and (b) and points (d) to (h); / (d) credit facilities, including loans and leases, provided to any type of enterprise or corporation; / (e) auto loans and leases; / (f) credit card receivables; / (g) trade receivables; / (h) other underlying exposures that are considered by the originator or sponsor to constitute a distinct asset type on the basis of internal methodologies and parameters;

Added(ii) points (e) and (f) are replaced by the following: