As outlined in detail in Edition 17 of this SCM Briefing, the European Commission's Capital Markets Union (CMU) Action Plan set out (amongst other things) two detailed legislative proposals establishing a set of European Criteria for "Simple, Transparent and Standardised" (STS) securitisation (in the form of a proposed Securitisation Regulation) and setting revised capital requirements for STS securitisations (in the form of a Regulation Amending the Capital Requirements Regulation (CRR)) (see the Feature Piece in Edition 17 for a detailed summary of the proposals). With the European Council having agreed on third Presidency Compromise texts of both Regulations late in 2015, the "trialogue" of the European Commission, Council and Parliament is currently negotiating to reach agreement on the final texts of the Regulations. Each iteration of the legislation has incorporated various changes from the original proposals, but several key issues remain unaddressed, such as the treatment of "legacy" transactions, and the ultimate inclusion (or not) of synthetic securitisations within the STS framework (on which the European Banking Authority has issued a recent Report recommending that the qualifying regulatory capital treatment for STS securitisations be extended to certain synthetic transactions). The deadline for responses on other aspects of the CMU Action Plan (which were outlined in Edition 17), including the Consultation Document on Covered Bonds in the EU and the Call for Evidence on the EU regulatory framework for financial services, has just passed on 6 January 2016, so we may now see further progress in relation to those workstreams in early 2016. In addition, another key aspect of the CMU package which was due to be released - the proposal to overhaul the Prospectus Directive - was issued at the end of November 2015 (see further below under Key Developments for more information).
Securitisation Regulation Third Presidency Compromise (dated 30 November 2015)
Regulation Amending CRR Third Presidency Compromise (dated 30 November 2015)