The Loan Market Association (LMA) has outlined its position on securitisation disclosure templates, calling for a simplified template for private securitisations in the short-term, and a complete rethink of templates in the long-term, suggesting a single template per asset class.
The LMA has responded to the European Securities and Markets Authority (ESMA) paper on Securitisation Disclosure Templates, published as a result of the European Commission’s October 2022 report on the functioning of the Securitisation Regulation. The paper sets out four options going forward:
- Option A – Delay any changes to the disclosure templates until the next review of the Level 1 text of the EU Securitisation Regulation.
- Option B – Retain the existing templates with amendments to enhance disclosure (for example for climate-related data fields) and to limit the use of “No-Data” responses.
- Option C – Develop a simplified template for private securitisations and streamline annexes in the current disclosure framework (including a relaxation of granular loan-level data).
- Option D – A full overhaul of the templates to make them simpler, with a single template per asset class (regardless of public/private nature of transaction). This option also includes a move away from “No-Data” responses and instead introduces “mandatory” and “optional” data fields.
The LMA is advocating for Option C in the short term, to ease the burden on the market and address more immediate concerns, followed by the longer-term solution in Option D to overhaul the framework.
The adjustments proposed under Option C may be sufficient to address the concerns identified by the European Commission in the short term, while Option D is a good long-term solution for all asset classes, the LMA believes. The LMA therefore supports inclusion of a new simplified template for private CLO securitisations which focuses on the needs of the supervisors.
Nicholas Voisey, managing director, LMA, said, “The LMA welcomes the opportunity to continue our dialogue with ESMA and comment on how to improve the reporting functionality of the Securitisation Regulation.”
“Our recommendation is a pragmatic short-term solution to the disproportionate reporting burden on CLOs. However, none of the proposals really shift the dial to optimise the funding role the CLO market can and should play. For that, the project needs to expand the scope of transactions that qualify for the more favourable capital treatment of STS status.”
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