On 12 April 2022, the EBA published its final draft Regulatory Technical Standards (the "RTS") specifying the requirements for originators, sponsors and original lenders related to risk retention as laid down in Regulation (EU) 2017/2402 of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation (the “Securitisation Regulation”) as amended by Regulation (EU) 2021/557 of 31 March 2021.
The RTS have been developed in accordance with Article 6(7) of the Securitisation Regulation, which mandates the EBA, in close cooperation with the ESMA and EIOPA to develop the RTS further specifying the risk retention requirements. The final draft RTS specify in greater detail the risk retention requirements and, in particular, address:
- the requirements on the modalities of retaining risk;
- the measurement of the level of retention;
- the prohibition of hedging or selling the retained interest;
- the conditions for retention on a consolidated basis;
- the conditions for exempting transactions based on a clear, transparent and accessible index;
- the modalities of retaining risk in case of traditional securitisations of non-performing exposures; and
- the impact of fees paid to the retainer on the effective material net economic interest.
Next Steps
The European Commission will now consider and adopt the draft RTS. They will then be submitted to the European Parliament and Council, following which they shall be published in the Official Journal of the European Union.
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