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ESMA Requirements

Jun 27, 2019
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The European Banking Authority provided in December 2018 guidelines for the STS criteria for ABCP securitisation.

This was followed on January 31st, 2019 by the ESMA reporting guidelines, including specific Annexes. Whilst further clarification is required for reporting requirements on trade receivables, we tend to believe that the most applicable reporting requirement are contained in Annex 9 (Esoteric Assets) whilst the ABCP Annexes (11 & 13) may be required by the certain banks for their securitisation conduits. Early June the German and French Banking Federations proposed a pragmatic approach along this line.

We anticipate the current proposed requirements will be reviewed and adapted to trade receivables as an asset class with a new version made available in Q4 this year after the validation of the EU Commission’s proposal by the European Parliament. At present Demica is configuring the reporting requirements on ten new transactions, that will not benefit from grandfathering to be compliant with these requirements.  Regardless of the exact format of the report we anticipate the line by line reporting by the Demica system to be essential with Invoice level data, availability of historical information and portfolio performance reporting. Some additional information is likely to be required: LEI codes (universal debtor identifier) and NACE (industry sector codes) and we are recommending all clients to consider adding this information into their system.

Whilst market participants are considering their position, with significant differences between banks, we anticipate alignment across the market given the number of significant transactions that are syndicated and will need to confirm to consistent rules and reporting.  STS securitisation and reporting requirements have been a major topic discussed at the IMN Securitisation conference in Barcelona this month where we met with all of major international banks active in this sector and we raised the matter with them.

We are in constant contact with our customers on this subject and will be updating individual programme needs with respect to their requirements as and when they become clear together with timing.