The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, published its Peer Review Report on National Competent Authorities’ (NCAs) supervision of Simple, Transparent and Standardised (STS) securitisations.
The Report looks into and provides recommendations on the supervisory approaches adopted by selected NCAs when supervising STS securitisation transactions and the activities of their originators, sponsors and securitisation special purpose entities.
Verena Ross, Chair, said:
“In the ESMA Position Paper published in May 2024, ESMA called for measures to revive the EU securitisation market. It is therefore key to have in place a robust supervisory framework. In this first Peer Review conducted under the Securitisation Regulation, we welcome the early efforts and commitment of the NCAs assessed in implementing the STS securitisation supervisory framework. We also identify opportunities to further enhance national supervisory approaches.
The exercise is an opportunity for all EU authorities competent for STS supervision to learn from their peers and strengthen supervisory convergence. This is important for the effective implementation of the STS framework, which ultimately should assist to increase investors’ confidence in STS securitisation.”
Key findings
The Peer Review focused on four NCAs: AMF (France), BaFin (Germany), CMVM (Portugal) and DNB (the Netherlands).
- To ensure effective supervision, all NCAs should implement an approach combining transaction-based and entity-based supervision tailored to the size of their securitisation market.
- ESMA recommends that NCAs build on their existing efforts and expand their approach to ensure the risks arising from STS securitisation transactions are adequately identified, assessed and addressed; and
- Some NCAs would benefit from introducing a more structured supervisory framework, a well-defined risk-based approach, and sufficient resources for STS supervision.
The recommendations are intended to support all EU NCAs, particularly those designated more recently or still awaiting designation. The NCAs are encouraged to continue monitoring the evolution of their STS markets and to adapt their supervisory approach and resource allocation as needed. This is particularly relevant in light of the ongoing fundamental review of the securitisation regulatory framework, with the aim to revive the securitisation market in the EU.
Next steps
ESMA will continue to facilitate and coordinate convergence work at the EU level. It expects to carry out a follow-up assessment in the future to evaluate progress made against the recommendations and track developments in STS supervision across jurisdictions.
Background
The Peer Review was conducted under the Securitisation Regulation, which mandated the review on the implementation of the STS criteria set out in its Articles 19 to 26. The Peer Review Committee carried out on-site visits and engaged with stakeholders. Before being approved by the ESMA Board of Supervisors, the Report underwent factual accuracy checks with the reviewed NCAs, and the ESMA Management Board ensured the consistent application of the Peer Review Methodology.
