On 30 June 2021, the European Banking Authority (EBA) issued a consultation paper on draft regulatory technical standards (RTS) specifying the requirements for originators, sponsors, original lenders and servicers related to risk retention, in line with the Securitisation Regulation. The draft RTS have been developed in accordance with Article 6(7) of the Securitisation Regulation, as amended by the Capital Market Recovery Package (Regulation 2021/557), which mandates the EBA to specify in greater detail the risk retention requirement in securitisation.

The draft RTS specify in greater detail the risk retention requirements and, in particular:

  • requirements on the modalities of retaining risk;
  • the measurement of the level of retention;
  • the prohibition of hedging or selling the retained interest;
  • the conditions for retention on a consolidated basis;
  • the conditions for exempting transactions based on a clear, transparent and accessible index;
  • the modalities of retaining risk in case of traditional securitisations of non-performing exposures; and
  • the impact of fees paid to the retainer on the effective material net economic interest.

The deadline for comments on the consultation paper is 30 September 2021.

The final draft RTS will be submitted to the Commission for adoption. Following the submission, the RTS will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union.

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