The EU Parliament today adopted the draft laws on STS for synthetic and NPL securitisations under the Capital Market Recovery Package (CMRP). As expected, the original ban on securitisation, which was not intended in this form, is being withdrawn in countries such as Australia. The securitisation quick fix appeared as Amendment 3 to MEP Paul Tang's (NL) original report on the general framework for securitisation and the specific framework for simple, transparent and standardised securitisation. It serves as a supporting measure in the COVID 19 crisis.
Next steps in the legislative process
After the vote in plenary, both texts still need the formal approval of the EU ministers in the Council. This will be followed by publication in the Official Journal, which may occur before the end of April 2021. The new STS Regulation and the CRR amendment will then apply within three days of their publication in the Official Journal. This is noteworthy as it differs from the 20-day publication deadline in the original political agreement.
Summary
The new securitisation rules contained in this bill allow what are known as synthetic balance sheet securitisations access to ‘simple, transparent and standardised‘ ("STS") status, which was previously available only to ‚true sale‘ securitisations. The new rules also amend some provisions on securitisations of non-performing loans (‚NPLs‘), correcting some unintended consequences of the original legislation. This is to be seen as very positive.
The final texts of the securitisation quick fix and the relevant amendments to the CRR can be found here:
