Regulatory / Industry Submissions
European Supervisory Authorities - Joint Committee Report on the Implementation and Functioning of the Securitisation Regulation (Article 44)
On 31 March, in accordance with their mandate for periodic review under Article 44 of the Securitisation Regulation, the European Banking Authority, European Securities and Markets Authority and European Insurance and Occupational Pensions Authority published a report on the effectiveness of the European Securitisation Regulation (the “Report”).
The Report contains many recommendations for reform and also includes interpretive guidance as to the application of the Risk Retention Regulatory Technical Standards (the “RTS”) relating to the “sole purpose” test that entities holding the required risk retention as originators must satisfy under the Securitisation Regulation (the “Guidance”). In particular, the Guidance focusses on the “predominant revenue” test set out in the RTS (the “PR Test”) as such test applies to third party origination vehicles – risk retention structures that are widely used in CLOs.
We would like to hear from you with your views on the Report so please do get in contact with hannah.vanstone@lma.eu.com if you have any views you’d be happy to share.
Read more about the Report
LMA responds to ESMA consultation on draft RTS for open-ended loan originating AIFs
Today, we responded to ESMA’s consultation on the draft Regulatory Technical Standards on open-ended loan originating alternative investment funds.
The LMA welcomes ESMA’s approach in providing a harmonised implementing framework tailored to the specificities of OE LO AIFs, allowing managers to demonstrate to their respective NCAs that they can maintain an open-ended structure.
We believe that the framework should be aligned with market trends aimed at meeting investors’ increasing demands for alternative investment strategies with a liquid profile.
Read the full response here
The LMA responds to ESMA consultation on the revision of the disclosure framework for private securitisation
The LMA welcomes ESMA's general approach to template reform set out in the Consultation Paper and supports the implementation of a simplified template for reporting of private securitisations in the short-term, ahead of the outcome of the Comission's broader Securitisation Regulation review. In particular, we belive that a simplified template should be made rapidly available for CLO reporting in order to provide relief for CLOs from the unduly onerous reporting burden under the current regime.
However, (as set out in more detail in out response), ESMA's proposal that the simplified template should only be made available for transactions where each sell-side entity is established in the EU is likely to limit applicability to European CLOs as very few will meet this requirement. Unless the issues mentioned in out response can be adequately adressed by ESMA, our preference would be to retain the current template reporting regime pending the outcome of the Comission's broader Securitisation Regulation review.