30 Amendments of Molly SCOTT CATO related to 2015/0226(COD)
Amendment 113 #
Proposal for a regulation
Recital 2
Recital 2
(2) In the Investment Plan for Europe presented on 26 November 2014, the Commission announced its intention to restart high quality securitisation markets, without repeating the mistakes made before the 2008 financial crisis. The development of a simple, transparent and standardised securitisation market constitutes a building block of the Capital Markets Union (CMU) and contributes to the Commission's priority objective to support job creation and a return to sustainable growth.
Amendment 118 #
Proposal for a regulation
Recital 4
Recital 4
(4) Securitisation is an important element of well-functioning financial markets. Soundly structured securitisation is an important channel for diversifying funding sources and allocating risk more efficientwidely within the Union financial system. It allows for a broader distribution of financial sector risk and can help to free up originator's balance sheets to allow for further lending to the economy. Overall, it can improve efficiencies in the financial system and provide additional investment opportunities. Securitisation can create a bridge between credit institutions and capital markets with an indirect benefit for businesses and citizens (through, for example, less expensive loans and business financing, credits for immovable property and credit cards).
Amendment 135 #
Proposal for a regulation
Recital 12
Recital 12
(12) It is important that the interests of originators, sponsors and original lenders that transform exposures into tradable securities and investors are aligned. To achieve this, the originator, sponsor or original lender should retain a significant interest in the underlying exposures of the securitisation, that exposures included in securitisations are not qualitatively different to those retained on the originators’ balance sheet and that, prior to being included in a securitisation, the exposures have been on the originators balance’ sheet for a significant proportion of their contractual tenor. It is therefore important for the originators or the sponsors to retain a material net economic exposure to the underlying risks in question both for a significant period prior to securitisation and following securitisation. More generally, securitisation transactions should not be structured in such a way so as to avoid the application of the retention requirement. That requirement should be applicable in all situations where the economic substance of a securitisation is applicable, whatever legal structures or instruments are used. There is no need for multiple applications of the retention requirement. For any given securitisation, it suffices that only the originator, the sponsor or the original lender is subject to the requirement. Similarly, where securitisation transactions contain other securitisations positions as underlying exposures, the retention requirement should be applied only to the securitisation which is subject to the investment. The STS notification indicate to investors that originators aThe STS notification should indicate to investors that originators have previously retained and will in the future retaining a material net economic exposure to the underlying risks. Certain exceptions should be made for cases when securitised exposures are fully, unconditionally and irrevocably guaranteed by in particular public authorities. In case support from public resources provided in the form of guarantees or by other means, any provisions in this Regulation are without prejudice to State aid rules.
Amendment 212 #
Proposal for a regulation
Article 2 a (new)
Article 2 a (new)
Article 2 a Eligible parties to Securitisation 1. Investors in securitisation shall be institutional investors. 2. In a securitisation, the originator, sponsor or original lender shall be a regulated entity as defined in Article 2(4) of Directive 2002/87/EC of the European Parliament and of the Council.
Amendment 213 #
Proposal for a regulation
Article 2 b (new)
Article 2 b (new)
Article 2 b Prohibition on re-securitisation The exposures underlying a securitisation shall not include securitisations.
Amendment 229 #
Proposal for a regulation
Article 3 – paragraph 3 – point a
Article 3 – paragraph 3 – point a
(a) establish written procedures commensurate with the risk profile of the securitisation position, and appropriate to their trading and non-trading book where relevant, to monitor compliance with paragraphs 1 and 2 and the performance of the securitisation position and the underlying exposures on an ongoing basis.. Where appropriate, those written procedures shall include monitoring of the exposure type, the percentage of loans more than 30, 60 and 90 days past due, default rates, prepayment rates, loans in foreclosure, recovery rates, repurchases, loan modifications, payment holidays, collateral type and occupancy, and frequency distribution of credit scores or other measures of credit worthiness across underlying exposures, industry and geographical diversification, frequency distribution of loan to value ratios with band widths that facilitate adequate sensitivity analysis. Where the underlying exposures are themselves securitisations, institutional investors shall also monitor the exposures underlying those securitisations;
Amendment 236 #
Proposal for a regulation
Article 4 – paragraph 1 – subparagraph 1
Article 4 – paragraph 1 – subparagraph 1
The originator, sponsor or the original lender of a securitisation shall retain on an ongoing basis a material net economic interest in the securitisation of not less than 25 %. Where the originator, sponsor or the original lender have not agreed between them who will retain the material net economic interest, the originator shall retain the material net economic interest. There shall be no multiple applications of the retention requirements for any given securitisation. The material net economic interest shall be measured at the origination and shall be determined by the notional value for off-balance sheet items. The material net economic interest shall not be split amongst different types of retainers and not be subject to any credit risk mitigation or hedging.
Amendment 243 #
Proposal for a regulation
Article 4 – paragraph 1 – subparagraph 1 a (new)
Article 4 – paragraph 1 – subparagraph 1 a (new)
1a. By way of derogation to the previous subparagraph, the risk retention percentage may be lowered to 10% where the originator of the underlying exposures has retained all those exposures on its balance sheet for more than half of their original maturity. Where the minimum retention on the originators balance sheet (MRBS) of such exposures is less than half of their original maturity the risk retention requirement will be proportionate in the following manner: risk retention percentage = 25 % - 2 * MRBS * 15 %
Amendment 247 #
Proposal for a regulation
Article 4 – paragraph 2 – introductory part
Article 4 – paragraph 2 – introductory part
2. Only the following shall qualify as a retention of a material net economic interest of not less than 5% within the meaning ofthe percentage determined in accordance with paragraph 1:
Amendment 251 #
Proposal for a regulation
Article 4 – paragraph 2 – point a
Article 4 – paragraph 2 – point a
(a) the retention of no less than 5%the percentage determined in accordance with paragraph 1 of the nominal value of each of the tranches sold or transferred to investors;
Amendment 255 #
Proposal for a regulation
Article 4 – paragraph 2 – point b
Article 4 – paragraph 2 – point b
(b) in the case of revolving securitisations or securitisations of revolving exposures, the retention of the originator's interest of no less than 5%the percentage determined in accordance with paragraph 1 of the nominal value of each of the securitised exposures;
Amendment 259 #
Proposal for a regulation
Article 4 – paragraph 2 – point c
Article 4 – paragraph 2 – point c
(c) the retention of randomly selected exposures, equivalent to no less than 5%the percentage determined in accordance with paragraph 1 of the nominal value of the securitised exposures, where such non- securitised exposures would otherwise have been securitised in the securitisation, provided that the number of potentially securitised exposures is no less than 100 at origination;
Amendment 263 #
Proposal for a regulation
Article 4 – paragraph 2 – point d
Article 4 – paragraph 2 – point d
(d) the retention of the first loss tranche and, where such retention does not amount to 5%the percentage determined in accordance with paragraph 1 of the nominal value of the securitised exposures, if necessary, other tranches having the same or a more severe risk profile than those transferred or sold to investors and not maturing any earlier than those transferred or sold to investors, so that the retention equals in total no less than 5% of the nominal value of the securitised exposures;
Amendment 264 #
Proposal for a regulation
Article 4 – paragraph 2 – point e
Article 4 – paragraph 2 – point e
Amendment 274 #
Proposal for a regulation
Article 4 – paragraph 6 – point b
Article 4 – paragraph 6 – point b
(b) the measurement of the level of retention and MRBS referred to in paragraph 1;
Amendment 277 #
Proposal for a regulation
Article 5 – title
Article 5 – title
Transparency requirements for originators, sponsors and, SSPE's and investors
Amendment 286 #
Proposal for a regulation
Article 5 – paragraph 1 – point b – point vi a (new)
Article 5 – paragraph 1 – point b – point vi a (new)
(vi a) information about the credit scoring process followed for the underlying assets in the securitisation, whether the originator, if a credit institution, uses the standardised, IRB or AIRB approaches for calculating credit capital requirements and the historical evolution of non-performing loans underwritten by the originator;
Amendment 287 #
Proposal for a regulation
Article 5 – paragraph 1 – point c – point ii
Article 5 – paragraph 1 – point c – point ii
(ii) details regarding the exposure characteristics, cash flows, loss waterfall, credit enhancement and liquidity support features;
Amendment 292 #
Proposal for a regulation
Article 5 – paragraph 1 – point e – point iii a (new)
Article 5 – paragraph 1 – point e – point iii a (new)
(iii a) information on the investors in the securitisation, including their country of establishment, sector and that of their ultimate beneficial owner, the size of their investment and to which tranche of the securitisation it relates;
Amendment 333 #
Proposal for a regulation
Article 8 – paragraph 4
Article 8 – paragraph 4
4. The securitisation shall be backed by a pool of underlying exposures that are homogeneous in terms of asset type. The underlying exposures shall be contractually binding and enforceable obligations with full recourse to debtors, with defined periodic payment streams relating to rental, principal, interest payments, or related to any other right to receive income from assets warranting such payments. Where the underlying exposures are mortgages, the ratio of outstanding principal to the current value of the properties shall not exceed 75 % at the time of securitisation. The underlying exposures shall not include transferable securities, as defined in Directive 2014/65/EU.
Amendment 334 #
Proposal for a regulation
Article 8 – paragraph 4 a (new)
Article 8 – paragraph 4 a (new)
4a. The securitisation shall involve no more than three tranches.
Amendment 335 #
Proposal for a regulation
Article 8 – paragraph 5 a (new)
Article 8 – paragraph 5 a (new)
5a. A synthetic securitisation shall not be considered to be STS securitisation.
Amendment 336 #
Proposal for a regulation
Article 8 – paragraph 6
Article 8 – paragraph 6
6. The underlying exposures shall be originated in the ordinary course of the originator’s or the original lender's business pursuant to underwriting standards that are no less stringent than those that the originator or the original lender applies to origination of similar exposures that are not securitised and shall be comparable in terms of economic substance and creditor classes to exposures originated in the ordinary course of the originator's or the original lender's business that are not securitised. Material changes in underwriting standards shall be fully disclosed to potential investors. In the case of securitisations where the underlying exposures are residential loans, the pool of loans shall not include any loan that was marketed and underwritten on the premise that the loan applicant or, where applicable intermediaries, were made aware that the information provided might not be verified by the lender. The assessment of the borrower's creditworthiness shall meet the requirements set out in paragraphs 1 to 4, 5(a), and 6 of Article 18 of Directive 2014/17/EU of the European Parliament and of the Council or of Article 8 of Directive 2008/48/EC of the European Parliament and of the Council or equivalent requirements in third countries. The originator or original lender shall have expertise in originating exposures of a similar nature to those securitised.
Amendment 346 #
Proposal for a regulation
Article 8 – paragraph 8
Article 8 – paragraph 8
Amendment 350 #
Proposal for a regulation
Article 8 – paragraph 9 a (new)
Article 8 – paragraph 9 a (new)
9a. ESMA, in close cooperation with EBA and EIOPA, shall develop draft regulatory technical standards further specifying the criteria for determining that a pool of exposures is homogeneous for the purpose of paragraph 4 of this article and Article 12 paragraph 2. ESMA shall submit those draft regulatory technical standards to the Commission by … [twelve months after entry into force of this Regulation]. Power is delegated to the Commission to adopt the regulatory technical standards referred to in this paragraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.
Amendment 360 #
Proposal for a regulation
Article 10 – paragraph 3
Article 10 – paragraph 3
3. The originator or sponsor shall provide a clearly documented liability cash flow model to investors, both before the pricing of the securitisation and on an ongoing basis, which precisely represents the contractual relationship between the performance of the underlying exposures and the payments flowing between the originator, sponsor, investors, other third parties and the SSPE.
Amendment 436 #
Proposal for a regulation
Article 16 – paragraph 2 a (new)
Article 16 – paragraph 2 a (new)
2a. The competent authority shall monitor, including through regular spot checks, new issuance, in particular of securitisations of which the market has little experience, in order to detect breaches as referred to in Article 17(1) or features for which there is no apparent justification other than to circumvent provisions of this Regulation.
Amendment 454 #
Proposal for a regulation
Article 17 – paragraph 2 – point g
Article 17 – paragraph 2 – point g
(g) maximum administrative fines of at least twicehree times the amount of the benefit derived from the infringement where that benefit can be determined, even if that exceeds the maximum amounts in points (e) and (f).
Amendment 455 #
Proposal for a regulation
Article 17 – paragraph 2 – point g a (new)
Article 17 – paragraph 2 – point g a (new)
(ga) minimum administrative fines of at least the amount of the benefit derived from the infringement where that benefit can be determined, even if that exceeds the maximum amounts in points (e) and (f).
Amendment 476 #
Proposal for a regulation
Article 29 – paragraph 3 a (new)
Article 29 – paragraph 3 a (new)
3a. By ... [two years after entry into force of this Regulation] ESMA, in close cooperation with EBA and EIOPA, shall publish a report on the feasibility of a regulatory framework, complementing the new framework on securitisation established in this Regulation, establishing a system of limited licensed banks, performing the functions of SSPEs and having the exclusive right to purchase exposures from originators and sell claims backed by the purchased exposures to investors. The report shall examine in detail the advantages and disadvantages, from a public policy and real economy perspective, of having clearly designated entities subject to a specific supervisory and insolvency regime covering the essential intermediation activities between originators and investors compared to the current highly heterogeneous situation.