Today, the European Commission formally adopted the regulatory technical standard (RTS) on homogeneity which may be found here.
In order for a securitisation to be STS, it must meet a lengthy series of criteria. One of these criteria is that the assets in the securitised pool must be homogeneous in character. Because of the difficulties inherent in defining something as elusive as “homogeneity”, this criterion was the only STS criterion for which the Commission was required to issue an RTS. This it did today. This does not mean though that this RTS is law as of today. Once adopted, it will be scrutinised by the Parliament and the Council who may reject it (but not amend it). Normally, the Parliament and Council have three months to veto such an RTS. However, this period is likely to be impacted by the fact that a new Parliament is coming in and it may therefore be September or October before the new RTS is officially on the books. However, its adoption today is a key step in lifting the uncertainty hanging over the STS market. As this document is so recent, PCS has yet to do a thorough analysis. At first glance, the Commission appears to have simplified somewhat the EBA’s original proposal without changing the underlying approach.