On 1 July 2014, 18 months after the introduction of the Prime Collaterised Securities Label ("PCS Label"), PCS introduced its first substantial revision of its eligibility criteria. New criteria have been added and certain existing criteria have been strengthened, others softened or removed due to repetitions. However, the vast majority of the rules is maintained.

PCS has published three frequentative versions, i.e. version 7.1, 7.2 and 7.3, which versions are combined in a final master version (7). Versions 7.1 and 7.2 have mainly tidied up the existing criteria. Version 7.3 reflects the most interesting changes and raises the standards to reflect market and regulatory developments and the refinement of the PCS Label. For these amendments, PCS aligned with the rules and approaches of European Insurance and Occupational Pensions Authority, the European Central Bank and the Bank of England. Below is a key summary of these changes. 

Certain new requirements: 

  • the notes should be listed on a recognised stock exchange;
  • continuity of servicing and other contracts in case of termination by the originator or other providers of such servicing activities, should be included; and
  • the originator should not be in a jurisdiction where severe claw-back rules are applicable. 

Modifications to certain existing requirements: 

  • the data disclosure standards are aligned with the European Data Warehouse rules;
  • the requirement that each PCS labelled issue should have two lead managers has been removed due to a strong lobby by the market participants. 
  • as the retention requirement has been expanded to all securitisation originators the criteria now encompass a single retention requirement; and
  • the requirement for two ratings is maintained, but the requirement for any given rating level has been removed.

Click here for the final master of the Rule Book (version 7). 

Click here for the latest checklist (version 6).