Today, the European Banking Authority released the long-awaited guidelines and recommendations on the interpretation of the STS criteria.
These guidelines are required by the STS Regulation and provide clarifications as to the correct interpretation of the over one hundred separate STS criteria. Technically, these will only become officially guidelines and recommendations once they have been translated into all the European Union official languages. On the other hand, in contradistinction with regulatory technical standards (RTS) such as the RTS on homogeneity, these guidelines are not a draft, do not have to be accepted by the European Commission and placed before the European Parliament and European Council before becoming effective. So, notwithstanding the technical issue of translation, these can be considered as final.
On the other hand, they are also, as the name indicates, guidelines and recommendations to national competent authorities. They do not have the status of law and are not legally binding on national competent authorities.
The guidelines cover both term and ABCP transactions.
It is fair to say that, without these guidelines, the STS regime was not capable of being operated. Hence the desire of the market to see them as soon as possible.
PCS will now carefully peruse them to see to what extent they have changed since the consultation paper and whether they will allow a smooth operation of the new STS regime come January 1st when it come into force.