News - PCS

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31/03/2025

Joint-Committee Report is published - much good, some disappointment, a lot of parcel passing

The Joint-Committee of the ESAs report of the implementation and functioning of the Securitisation Regulation has just been published. As you could probably tell from the inelegant and cumbersome title of the report, this is a document that the European Supervisory Authorities (ESMA, EBA and EIOPA) are required by law to produce every three years. However, this one is important, coming as it does, at a time when the European Commission is mulling over possible deep changes to the European Union's securitisation framework. At 83 pages, it is not a quick read. It contains much that is quite good. It […]

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20/03/2025

The CMU is dead, long live the SIU!

Yesterday, the European Commission issued a communication on the Savings and Investments Union . For the cognoscenti of European policy, the Savings and Investments Union ("SIU") is not a new initiative but the rebranding of the project heretofore known as the Capital Markets Union or "CMU". So, the CMU is dead, long live the SIU! Reading the communication, as well as the attendant press release, the proposals to reform securitisation's legal and regulatory framework in a constructive manner remains part of the project. (To be found on pages 11 and 12, for those who wish to go straight to it). […]

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16/02/2025

ESMA's consultation on disclosure: a puzzling addition to the consultation merry-go-round

The European Securities and Markets Authority (ESMA) has just published a consultation on the revision of the disclosure framework for private securitisation under Article 7 of the Securitisation Regulation. The deadline is March 31. Although any improvement on the over-burdensome disclosure regime for securitisations is welcome, this consultation has left some of us more confused than hopeful. First, it is limited to "private" securitisations - legally defined as securitisations that do not require a prospectus under the Prospectus Regulation. Since much of the policy discussions around reviving securitisations from Lagarde to Draghi have centred on growing the capital markets by […]

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14/01/2025

PCS files its response to the UK PRA's consultation on CRR

PCS has filed its response to the United Kingdom's Prudential Regulation Authority consultation on proposed changes to the CRR, including a number of securitisation rules. The proposals are overall going in a positive direction but will fall short, in PCS' opinion, of what is needed both to correct the distortions introduced in UK markets by miscalibrated regulations and to allow UK banks to compete with their international peers on a level playing field. In addition to responding on the precise proposals, PCS's document starts with three point of general application which are of concern: the limits of Basel conformity, evidence […]

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12/12/2024

2024 - The Year In Review

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05/12/2024

Everything you need to know about reforming Europe’s securitisation rules… and some you don’t

PCS, together with many other stakeholders, filed its response to the Commission’s consultation on Europe’s securitisation framework. At 167 questions, there is no doubt the Commission’s survey was comprehensive. At a little over 30,000 words, we hope PCS’ response was too. Reflecting our nature as an independent voice seeking to help revitalize the securitisation market as a safe and strong tool for financing the European economy, our response seeks to present a coherent approach and a middle course between the minimalist posture of some stakeholders, most prominently the prudential regulatory community, and a more radical, and in our view maybe […]

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23/10/2024

Synthetic issuers, it is time to get ready

It is now official: the new guidelines on the STS criteria for on-balance-sheet securitisations will apply from 9 December 2024. After a consultation phase in 2023 in which all major market participants including PCS participated, the Final EBA Report on the guidelines was published on 27 May 2024 and scheduled to become applicable two months after its translation into all 23 European languages. These translations are now all done. They can be downloaded from the EBA website, and in each case , 9 December 2024 is the date they come into force. Quoting the EBA: "the Guidelines on the STS criteria […]

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16/10/2024

UK PRA publishes its consultation on capital requirements, including many securitisation proposals

For those who, seeing the European Commission's consultation deadline of 4th December, were fearful that they may for once have no excuse this Christmas to slip away from burdensome family commitments, the United Kingdom's Prudential Regulation Authority has ridden to the rescue. They published yesterday their own consultation on CRR amendments: deadline, January 15. A few things to note. First, the consultation is on capital requirements generally and so goes beyond only securitisation issues. Secondly, securitisation does feature prominently and with some meaningful proposals including a new "formula" based p factor and a proposed nod to unfunded SRT synthetics - […]

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09/10/2024

And it begins... European Commission publishes its consultation on securitisation

The last few months have seen numerous calls by eminent people to takes steps to reform the regulations governing securitisations and thus revitalise of the market on a sound basis. Today the European Commission, by publishing its consultation. formally started the process that, with a fair wind, could result in those hoped for reforms. A (very) quick scan of the document reveals a number of things. First, it seems to be quite exhaustive, covering all the main topics identified as relevant. These include LCR eligibility, Solvency II and the possible addition of unfunded synthetics to the STS category, as well […]

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06/10/2024

Greek finance minister shares his reasons for supporting securitisation

PCS was honoured to receive Mr Hatzidakis, the Finance Minister of Greece, as the keynote speaker at our Athens symposium last week together with Dr Lazarakou, Chair of the Hellenic Capital Markets Commission. Mr Hatzidakis shared his views on how securitisation had been a vital component of the Hellenic Republic's financial recovery after the devastating blows that followed the sovereign crisis of 2012. In particular, the minister spoke of the Hercules program, devised and piloted by the former deputy finance minister, Mr George Zavvos who also was kind enough to participate in the PCS symposium. The minister explained how Greek […]

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09/09/2024

Draghi report published - securitisation gets a supportive mention

The Draghi report on the future of European competitiveness was published today. It's sixty five pages cover a lot of ground, and if you want to truly dive in, you can read the 327 pages of the in-depth analysis companion document. If, like us, you have broad interests but are currently focusing on securitisation, we invite you to go straight to pages 60 and 61 of the main report. These contain both strong and explicit support for a revival of securitisation. The report notes, for example, that "EU banks also face some specific regulatory hurdles which constrain their capacity to […]

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07/07/2024

FSB report cum consultation - a surprisingly (if deliberately) narrow document

Last week the Financial Stability Board, an emanation of the G20, published what it called a "consultation report". The report is entitled "Evaluation of the Effects of the G20 Financial Regulatory Reforms on Securitisation". At over 90 pages, we wanted to have a careful read before reporting on its content. The first conclusion is that, notwithstanding the very broad title, the report is deliberately narrow in the topics it chooses to cover. The FSB explicitly states that it has focused solely - on the policy side - on the retention rules and the prudential capital requirements for bank investors. Other […]

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28/06/2024

Good news for Italian banks

In one of those highly technical yet genuinely impactful regulatory decisions, the EBA issued an opinion backing a decision of CONSOB on collateral for synthetic transactions. Briefly, you cannot have an STS synthetic transaction unless it is either in the form of a credit linked note (CLN) or it is cash collateralised. In Italy, for legal reasons, CLNs do not work. Further, the rules prohibit the cash collateral from being held by the originating bank unless that bank is at least CQS2. Again, in Italy, because of issues relating to rating agencies’ sovereign caps, banks are not CQS2. This meant […]

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14/06/2024

Norway's securitisations to join the EU

It is not a widely known fact that some European Union laws can be adopted by the other three countries of the European Economic Area - namely Norway, Iceland and Lichtenstein - in such a way that, once adopted those countries are considered to be fully part of the EU for the purposes of the subject matter of those laws. Even less known, we suspect, is that the EU Securitisation Regulation is such a law. This week, five years after coming into force in the EU, the Securitisation Regulation (and its later 2021 amendment) was formally adopted by the EEA. […]

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29/05/2024

June 2024 Newsletter

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13/05/2024

Anna Woźniakowska joins PCS

PCS is proud and delighted to announce that Anna Woźniakowska-Dębiec is the newest member of the PCS team. Trained as a lawyer, Anna has a range of experience within both the private sector and the Polish Financial Supervision Authority. She was both a member of the EBA Subgroup on Securitisation and Covered Bonds and ESMA Securitisation Task Force. Anna joined the PCS Outreach Team. Beyond her professional engagements, she actively contributes to various women’s initiatives, including serving as a board member for the Polish Ladies Golf Association.

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01/05/2024

PCS Presents: Basel 3.1 in partnership with KPMG

In a new venture for PCS, we present our first YouTube interview with experts and market participants. Designed to delve deeper into a specific subject, this first interview is with Alec Innes, partner at KPMG who addresses the final implementation of the Basel framework. Alec delves into the multifaceted realm of Basel 3.1 capital requirements and its profound implications for banks. He dissects the operational changes that Basel 3.1 will drive and the financial resource challenges that accompany them. He examines the dichotomy of Basel 3.1 as both a regulatory aid but also a potential hindrance, navigating the fine line […]

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30/04/2024

PRA and FCA publish the new UK securitisation rules

Following the publication by the UK Treasury of the draft statutory instrument, the FCA and PRA have today published policy statements on the new securitisation rules. These policy statements, each containing the full new proposed rules, can be found here and here. (Note that the proposed PRA rules are to be found hidden in the appendices - scroll down the left hand column). These rules, together with the statutory instrument will come into force on November 1st. This is all to the good since the market will take some time to digest these documents with the FCA rules alone running […]

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29/04/2024

And the support kept rolling in from everywhere...again

Following a plethora of voices supporting the revival of European securitisation, last week saw another addition to the chorus. It came in the form of the publication of the report by a committee set up by the French Treasury and headed by Christian Noyer. The report entitled "Developing European Capital Markets to Finance the Future" (which can also be read in the original French) makes for interesting reading indeed, especially in its opening analysis of the reasons why many European policy makers are deeply concerned about the consequences of an underpowered European capital market. To its credit, the report also […]

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24/04/2024

UK Treasury publishes draft securitisation statutory instrument

Earlier this week, the UK Treasury published a draft statutory instrument on securitisation. For our readers less well versed in the British constitutional arrangements, a statutory instrument is a secondary piece of legislation passed by the government pursuant to an Act of Parliament (pace my British legal friend, I know but we are summarising here…). In Brussels it would be known as Level 2 and in many European jurisdictions as a “decree”. This draft is designed to fill in gaps left by the post-Brexit repeal of EU legislation, including the Securitisation Regulation. As assidous followers of PCS’ news items know, the […]

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18/04/2024

And the support kept rolling in from everywhere...

In the past few months, the revival of a safe and strong securitisation market as a key priority for Europe's future has received high level support from numerous directions, including the ECB's president, its Governing Council, the Eurogroup and the finance ministers of France and Germany. This week, more support came from Enrico Letta in his report on the European Single Market. The report was commissioned by EU leaders last year. It was designed and is likely to influence the European Council’s strategic agenda for the next five years following the elections in June of a new Parliament and the […]

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21/03/2024

Eurogroup adds its support for the revitalisation of European securitisation

The only thing arriving seemingly in greater numbers than new public securitisation transactions this March are expressions of support for the market from European policy makers. The same day as the supportive Governing Council of the ECB's statement but maybe less noticed, we saw the publication of the "Statement of the Eurogroup in inclusive format on the future of the Capital Markets Union". The Eurogroup is an informal body created in 1997 in which the ministers from the euro area member states discuss matters relating to their countries' common responsibilities related to the euro. This statement was the result of a […]

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16/03/2024

PCS files its response to ESMA's consultation on disclosure

PCS has filed its response to ESMA's consultation on disclosure requirements. Our views are that the current disclosure templates are overly prescriptive, contain many unnecessary requirements and have become a deterrent to potential originators. This constricts a European securitisation market that is ever more necessary to the future of the continent. Even if one does not want to wade through the more than twenty pages of our response, containing a number of fairly technical points, we would invite stakeholders to peruse our general considerations on the subject set out in the first few pages.

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11/03/2024

More support for securitisation reform from the ECB

Following the speech by Christine Lagarde last November calling for the revitalisation of the European securitisation market as a key priority for the European Union, the European Central Bank has now issued a statement by its Governing Council on advancing the Capital Markets' Union. As in the speech by Ms Lagarde, the statement places the growth of a securitisation market at the center of its recommendations. Together with consolidated European supervision, the harmonisation of insolvency, accounting and securities laws, the improvement of post-trading regimes and the amelioration of the fiscal disadvantage faced by equity investments, securitisation is one of the […]

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26/02/2024

Securitisation, Europe's categorical imperative

It is rare for Immanuel Kant's name to be associated with the technical subject of securitisation. Yet this is what happened when Christine Lagarde asked for a "Kantian shift" in respect of the CMU. Taking our cue from such eminent personage, PCS also called on the memory of the great Enlightenment philosopher in an article published in Eurofi's Regulatory Update magazine and entitled, "Securitisation, Europe's categorical imperative".In the article, we set out the reasons securitisation's benefits go well beyond assisting European banks with episodic capital tight spots. Securitisation, by helping at one and the same time both the banking channel […]

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31/01/2024

PCS response to the PRA consultation on the output floor

Today, PCS submitted its response to the PRA on its consultation on how best to handle the introduction of the output floor pursuant to Basel 3.1 as it relates to securitisation. Although welcoming the PRA’s suggestions, PCS felt bound to point out that all the obvious difficulties that flow from a rigid application of the proposed Basel rules to securitisations – and especially SRT securitisations – flow from the original miscalibration of the capital requirements. More specifically, they flow from an incorrectly calibrated non-neutrality factor. This is then made worse by structural flaws in the current CRR architecture that results […]

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21/12/2023

ESMA's Christmas Present: a Consultation on the Disclosure Templates

With the markets pretty much gone for the festive break, ESMA gave the markets an unexpected Christmas gift: it published today the much-awaited public consultation on the overhaul of Securitisation Regulation's disclosure templates. To be commended, ESMA's consultation showed no lack of ambition, in that it opens potentially wide vistas of change rather than limiting itself to tweaks. ESMA seeks feedback on four possible ways forward, ranked from minimal to most extensive: The deadline for response is the 15 March 2024.

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14/12/2023

2023 - The STS Year in Review

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17/11/2023

Lagarde calls for a strong securitisation market as an essential component of a historically necessary change to Europe's finance architecture

It is not everyday that a public official calls upon the legacy of the great philosopher Immanuel Kant, but Christine Lagarde did just that today in a short but impactful speech on the historical necessity of the creation of a strong European capital market's union. A more than notable passage in the speech reads: "A genuine CMU would mean building a sufficiently large securitisation market, allowing banks to transfer some risk to investors, release capital and unlock additional lending." Not only is this very high profile support for a strong securitisation market positive, but it should be noted that it […]

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03/11/2023

UK PRA publishes a paper on future capital calibrations

Following publication of HM Treasury’s near final statutory instrument and consultations by the PRA and FCA, all aiming to adapt the inherited EU Securitisation Regulation for a post-Brexit UK, the PRA has now issued a Discussion Paper on the Capital Requirements for Securitisation. The paper focuses on the consequences for the capital requirements of securitisations of the Basel 3 output floor, the hierarchy of methods for determining these capital requirements and a possible STS for on-balance-sheet (synthetic) securitisations. The initial suggestions of the PRA in all 3 areas deviate from the current trends in EU regulation and are not altogether […]

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