The EU Securitisation Regulation1, which came into effect on 1 January 2019, consolidates and harmonises the European Securitisation risk retention regime and aims to create “simple, transparent and standardised” (STS) transactions
In particular, Article 7 of the regulation will increase the scope and nature of the transparency and disclosure requirements applicable to issuers, sponsors and originators of collateralised loan obligation transactions, a form of securitizations where payments from multiple loans are pooled together and passed on to different classes of owners in various tranches.
Detailed requirements for the information to be provided were set out in the draft regulatory technical standards (RTS) by the European Securities and Markets Authority (ESMA). Under these standards, CLO transactions will be required to provide information per the relevant reporting annexes including those on corporate underlying exposures, investor report information and, for ‘public’ transactions, annexes dealing with inside information and significant event information, if applicable.
While these annexes raised concerns among industry participants over operational practicalities and the resources required of enhanced reporting– and exacerbated by the lack of any introductory transitional period, the European Supervisory Authorities provided indicative relief saying that it was unlikely that the EMSA RTS would be adopted immediately2. Instead, the transitional provisions of Article 43(8) of the Securitisation Regulation will apply to the underlying exposure and investor reporting obligations under Article 7(1)(a) and (e) until further notice.
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