ESMA proposes limited changes (for the time being)

ESMA has published its planned consultation on targeted changes to the disclosure framework for private securitisations under the EU Securitisation Regulation.

Its earlier December 2023 Consultation Paper on the Securitisation Disclosure Templates sought stakeholder views on four possible options:

• Option A: Postpone the review of the disclosure templates until the next review of the EU Securitisation Regulation.
• Option B: Introduce a limited number of refinements to the current framework to enhance disclosure.
• Option C: Introduce a simplified template for private securitisation and undertake a targeted revision of the templates, aimed at streamlining disclosure.
• Option D: Undertake a complete and thorough review of the reporting framework aimed at a substantial simplification of disclosure requirements.

In its December 2024 Feedback Statement, ESMA confirmed that most respondents had favoured Option C.

In light of the impending changes to the Level 1 text of the EU Securitisation Regulation (due for publication in Q2 2025), ESMA has decided to focus for the time being on limited changes to the disclosure templates.  Its aim is to reduce the disclosure burden.  Plans for more wide-ranging changes to the disclosure templates are postponed until after the changes to the Level 1 text of the EU Securitisation Regulation are largely agreed.

Key Proposals

The new consultation paper focuses on a simplified template for private securitisations.  Some key points to note are:

• The focus is on key transaction details, parties, and underlying exposures (largely looking for aggregate rather than granular data).
• The template is drafted to apply equally to ABCP and non-ABCP, and regardless of asset class (the proposed template is “intentionally independent of the asset class”).
• The template is for private securitisations where all sell-side parties are established in the EU.
• ESMA notes that, in general, where a sell-side party is outside the EU the disclosure requirements applicable to public securitisations will apply instead. However, ESMA is looking for feedback on whether the presence of the originator or sponsor in the EU should be sufficient to allow use of the simplified template in a private securitisation.
• ESMA proposes that originators, sponsors and SSPEs in private securitisations would still need to provide the full set of public securitisation disclosures to investors, potential investors and competent authorities on request.
• ESMA wants to avoid the use of customised / bespoke disclosure, so is proposing that sell-side parties make the streamlined disclosure template available (they must designate one sell-side party to do this) to investors and any relevant competent authority.  ESMA is looking for feedback on the reporting format (CSV or other).
• Limited event-driven disclosure will apply in addition to scheduled quarterly/monthly disclosure requirements.
• Requests for information on risk retention has been included in the draft simplified template (ESMA’s stated aim is to ensure completeness and reduce the frequent need for supervisory authorities to request additional data through ad-hoc templates).

Timing and next steps

The consultation closes on 31 March 2025.

ESMA is working with the European Commission to see whether it’s viable to make the private securitisation-specific amendments to the existing regulatory technical standards on disclosure before the Level 1 review of the EU Securitisation Regulation is implemented.  If the Level 1 review is published as planned in Q2 2025, it would be well into 2026 before it is finalised and implemented.