Echoing many of the sentiments expressed in the original CMU Green Paper, the Commission notes that the development of Simple, Transparent and Standardised (STS) securitisation is the "natural next step to build a sustainable EU market for securitisation", the concept referring to the process rather than the credit quality of the underlying assets, with the framework based on a two-step process: (i) identification of sound instruments based on clear eligibility criteria; and (ii) adjustment of the regulatory framework to allow a more risk-sensitive approach (for STS deals).  The STS framework would not replace thorough due diligence by investors, nor credit control in relation to the securitised loans (the Commission making it clear that already-introduced regulation, e.g. provisions on risk-retention, increased prudential regulation and higher underwriting standards, are being simplified and harmonised across existing legislation, and not being replaced by this legislation, and extensive repeals and amendments to the LCR and Solvency II Delegated Acts will also be required).  This approach also encourages market participants to develop standardisation, which the Commission calls upon Member States to help facilitate.  As you may expect, the STS legislative framework is heavily underpinned by the European Supervisory Authorities (the "ESAs", the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA)) having a key role in the monitoring and evaluation of the framework, co-operating with national regulators and in preparing a raft of further delegated legislation (mainly in the form of Regulatory Technical Standards (RTS), Implementing Technical Standards (ITS) and Guidance) that is required to accompany these legislative proposals by specifying further detail on various aspects of the STS proposals.  Indeed, the Commission's STS Criteria largely implement the recommendations of the EBA's earlier Report and Opinion to the Commission on "Simple, Standard and Transparent" securitisation - see the summary of the EBA's advice in Edition 16 of this SCM Briefing.  The STS Criteria also build upon the 14 global Criteria for "Simple, Transparent and Comparable" securitisation recently finalised by the Basel Committee and IOSCO (see the Key Developments section of this SCM Briefing for a summary), although the CMU legislative proposals go further in terms of extending the STS legislative framework to encompass short-term (ABCP) transactions.  The Commission also notes the consistency of the STS Criteria set out in the proposed Securitisation Regulation with the ECB's collateral policy for asset-backed securities (ABS), which includes the additional rules and guidance released with regard to the ECB's ABS purchase programme (see Edition 13 of this SCM Briefing for further information) and notes that the legislative proposals envisage a preferential (i.e. lower) regulatory capital treatment for STS deals than that set out in the Basel Committee's Final Revisions to the Securitisation Framework (see the Feature Piece in Edition 14 of this SCM Briefing for further background).  Indeed, the Basel Committee has committed to reviewing in 2015 the status of its (global) capital rules for securitisations and plans to issue a revision in due course, such that these proposals (at least relating to the regulatory capital treatment - see the summary of the Regulation Amending CRR below) to some extent pre-empt that revised, global framework (which will need to be implemented by all Basel Committee member countries - so setting the EU rules now could mean a re-write further down the line.)  However the Commission does clearly note that no outcome on that Basel Committee work-stream is expected before mid-2016.