The ASF is a signatory to an
AFME led joint association response to
ESMA’s consultation which was submitted to ESMA (European Securities and Markets Authority) on 21 March. The response elects for the adoption of Option C as a more efficient and expedient method of simplifying the disclosure and reporting requirements applicable to private securitisations (which includes Australian securitisation transactions).
Background
Article 7 of the European Securitisation Regulation (SECR) sets out the transparency requirements for all types of securitisations. The reporting entities (i.e. issuing entities) must submit various documents (investor reports) and data on underlying exposures. The format of the information to be provided is defined in the disclosure technical standards and set out in a various data reporting templates.
In October 2022, the European Commission (EC) submitted a report on the functioning of the SECR, having obtained input from a diverse range of stakeholders including on behalf of third countries issuing entities who sell asset backed securities to European investors. The feedback included concerns around the proportionality of the SECR due diligence and transparency requirements, considered as overly prescriptive and restrictive compared to alternative reporting frameworks within and outside of Europe for similar instruments, and the lack of differentiation between public and private securitisations. The lack of reporting proportionality for third country securitisations was highlighted as creating compliance challenges and legal uncertainties for European investors when investing in such transactions. The SECR does not distinguish between EU securitisation transactions and transactions where one of the parties of a transaction is located in a third country.
With these shortcomings in mind, the EC reports and industry feedback have noted the difficulties for entities to comply with their obligations under Article 7 when a transaction involves sell side parties located both inside and outside the EU. The ESMA consultation responds to the first step by the EC to address a review of the technical standards (i.e. data reporting templates) and possibly develop a simplified template for private securitisations (relevant to Australian securitisations) and thereby ensure adequate proportionality of the SECR transparency requirements while maintaining the usefulness of data for proper due diligence. AFME, the ASF and a number of trade associations have responded to the ESMA consultation focussing on the need for a targeted review of the reporting templates by streamlining templates in the current disclosure framework and even relaxing the loan level data granularity for private securitisations.
Read the AFME led joint association response >