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Int’l banking safety groups issue fresh rules on short-term securitizations, fair play

The leadership of two international finance monitoring bodies, the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO), on Monday issued the Criteria for identifying simple, transparent and comparable short-term securitisations.

IOSCO averred that the short-term STC criteria aim to assist the financial industry in its development of simple, transparent and comparable short-term securitisations.

The criteria maintain and build on the principles in the Criteria for identifying simple, transparent and comparable securitisations issued by BCBS-IOSCO in July 2015.

Indications show that the criteria published on Monday take account of the characteristics of asset-backed commercial paper (ABCP) conduits, such as (i) the short maturity of the commercial paper issued, (ii) the different forms of programme structures and (iii) the existence of multiple forms of liquidity and credit support facilities.

The criteria incorporate feedback collected during the public consultation conducted in July 2017.

Changes made include clarifying that the criteria do not automatically exclude equipment leases and auto loan and lease securitisations from the short-term STC framework.

Similar to the STC criteria for term securitisations, the short-term STC criteria are non-exhaustive and non-binding. Additional and/or more detailed criteria may be necessary based on specific needs and applications.

The BCBS has concurrently issued the Capital treatment for simple, transparent and comparable short-term securitisations outlining how the short-term STC criteria could be incorporated into the regulatory capital framework for banks.