The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published a Consultation Paper on Guidelines on securitization repository data completeness and consistency thresholds. The consultation’s objective, according to ESMA, is to help market participants and securitization repositories to understand the regulator’s expected maximum use of No Data options contained within a securitization data submission.
The proposed Guidelines set out an initial calibration of thresholds to be applied by securitization repositories when verifying the completeness and consistency of disclosure templates submitted to them under the technical standards (TS), recently published by the European Commission (EC), setting out the key elements of the disclosure obligations for securitization transactions as well the operational standards of securitization repositories.
ESMA said it believed that these proposals will help market participants and securitization repositories understand ESMA’s expected maximum use of ‘No Data’ options when submitting the information contained in the disclosure templates. “While the technical standards are yet to be adopted by the Parliament and Council, we believe that providing this clarification, ahead of time, to market participants, securitization repositories, reporting entities and investors will allow them to be sufficiently prepared for the introduction of the new reporting templates,” said ESMA Chair Steven Maijoor. “Our proactive approach contributes to stable and orderly markets as well as promoting investor protection,” he added.
Guidelines and Technical Standards
The technical standards define the content and format of the information which an originator, sponsor and SSPE of a securitization must provide to competent authorities, investors and potential investors in a securitization. They also set out the obligations of a securitization repository, through which this information must be made available. One of the obligations of a securitization repository 17 January 2020 ESMA71-99-1275 is to verify that the data it receives from the originator, sponsor and SSPE of a securitization is “sufficiently representative” of the underlying exposures in a securitization, which is understood as the permitted level of use of the No Data options in the disclosure templates by the securitization parties.
The proposed Guidelines contained in this CP set out:
- The proposed calibrations for data completeness thresholds to be applied by securitization repositories;
- Explanations as to how and when ESMA intends to revise these thresholds; and
- An example of how the representativeness verification of these thresholds would be applied to a sample exposure report (Annex II);
The CP follows on from ESMA’s final report on securitization repositories technical standards, where the thresholds were presented to the market, as well as ESMA’s role in calibrating them.
ESMA said the public consultation is open until 16 March and responses are sought from securitization repositories, providers of securitization information to repositories, as well as trade associations, investors, and consumer groups. It also said it aims to publish the Final Report on the Guidelines as close as possible to the publication of the technical standards in the Official Journal.