The Reserve Bank of Australia (RBA) released a consultation paper
in April regarding new criteria for eligible self-securitisations. Given its large actual and contingent exposures to notes issued from self-securitisations, the RBA is seeking to minimise any associated legal risk by proposing additional eligibility criteria that would apply to all self-securitisations.
The proposed criteria are outlined in the Draft Eligibility Criteria set out in the consultation paper. The overriding objectives in establishing these criteria are to:
• Reduce the potential for material mismatches between key terms of eligible self-securitisation transaction documents and prevailing market practice for public securitisations.
• Standardise the approach for transaction document changes and provision of information to the RBA that have the potential to alter the credit risk of self-securitisations.
• Ensure that key legal opinions relating to self-securitisations are in place and remain current.
• Provide greater assurance to the RBA that self-securitisations adhere to the RBA’s eligibility criteria on an ongoing basis.
The RBA’s consultation has invited feedback on the proposed changes. The ASF with input from a working group comprised of a broad section of its members has prepared and submitted a letter to the RBA responding to the changes and the questions posed by the RBA consultation.
The ASF’s letter can be found here