ASF Market Guidelines

Shared collateral and trust-back agreements - written legal confirmation (paragraph 58 APG 120)

Template legal confirmation letter

Under paragraph 58 of the final revised APG 120, APRA has clarified that, subject to certain conditions, a shared collateral agreement may be considered equivalent to a formal second mortgage for the purposes of APS 120 only. 

One of the conditions specified in paragraph 58 is that the ADI is to obtain a written legal confirmation that the rights and protections afforded to the ADI under a trust-back agreement are equivalent to a formal second mortgage, including the ADI’s unequivocal right to access the shared collateral in the event of default of the non-securitised loan and following the occurrence of a title perfection event. 

The ASF, together with several of its legal firm and ADI members, have agreed on a template legal confirmation letter (the drafting of which was undertaken by King & Wood Mallesons). This template may be provided by legal advisers to ADIs to assist in addressing the requirement contained in the second part of paragraph 58 (if considered appropriate). 

The template legal confirmation letter is not in any way deemed to be any form of advice by the ASF, nor should it be assumed that it fully meets the requirements for compliance with paragraph 58 of APG 120.

Download template legal confirmation letter

Australian securitisation disclosure and reporting standards

Loan level data disclosure – RMBS (October 2016)

ASF members, in conjunction with the RBA, have adopted a risk-based approach to the provision of loan level data to Permitted Users. 

ASF framework

Whilst the release of such data is the responsibility of RMBS sponsors, the ASF framework is designed to promote the efficient operation of RMBS markets whilst mitigating certain risks relating to the loan level data by taking into account the circumstances of the Permitted User and the data requested. 

The following framework is a recommended minimum standard for industry participants. Transaction sponsors responsible for the release of loan level data may adopt additional requirements at their discretion, or as circumstances dictate.

The key elements of the ASF framework relating to the provision of loan level data are:

  • certain sensitive data that is provided to the RBA is not required to be made publicly available;
  • information providers (sponsors) enter into ASF Data Access Deeds (i.e. non-disclosure deeds) with Permitted Users that, amongst other things, limit the purpose for which the data may be used;
  • sponsors adopt a risk-based approach in assessing the safeguards that Permitted Users have in place to minimise any impact on individuals’ privacy.

Resources

ASF Data Access Deed – RMBS (Word)  Pro-forma Data Access Deed 
Process Flowchart (PDF) Process flowchart that sponsors may follow in making a risk assessment of an applicant before allowing an applicant access to loan level data.
Due Diligence Guidance Notes for Sponsors (PDF) Guidance notes to assist sponsors with further risk assessment of an applicant
Frequently Asked Questions (PDF) Further information about the ASF framework 
RBA Securitisations Industry Forum Further information about the RBA information reporting framework
   

ASF standards post TFUMP

In the wake of the global 2007/8 financial crisis, IOSCO's Task Force on Unregulated Markets and Products (‘TFUMP’) published its Final Report (PDF) in September 2009, and a subsequent Implementation Report (PDF), which tracked global progress.

IOSCO’s objectives were to improve investor confidence, aid greater comparability of transaction information and to better performance assess transactions, securities and collateral. 

ASF responded to every TFUMP recommendation by taking industry-led measures, as well as engaging with policy and standards reform work led by the Australian official community. The foundation of the ASF response to IOSCO’s TFUMP was formulation of minimum and consistent standards and practices by issuers of Australian asset- and mortgage-backed securities, developed between 2009 and 2012. 

More recently, the industry has worked to implement and evolve these standards through collaboration with The Reserve Bank of Australia (RBA) on its new mandatory reporting requirements. 

Two ASF standards remain in force, pending any reporting guidance from the RBA on these items:

ASF also produced standardised reporting arrangements for Australian covered bonds.

RBA securitisation system and Eligible Collateral

Every public term and ‘internal-’/´self-´/´repo-’ securitisation for which Eligible Collateral status is sought, must comply with these RBA standards. 

This follows the RBA's announcement that it would only accept eligible securitised notes in its Committed Liquidity Facility and Fast Payments Solution, as well as Open Market Operations where compliance with its prescribed reporting occurred. 

See the media release from the RBA to understand more about the regime.

Periodic pool level CPR calculation

ABS Perpetual has published a best practice note on the Derivation of CPR from RBA Data (PDF). This is based on an industry agreed approach to the methodology for calculating a periodic pool level Conditional Prepayment Rate (CPR), with the requisite data to be sourced from the approved RBA reportable data.