May 26, 2017
The European Commission and the EU Council stand a good chance of reaching some agreement with MEPs at the seventh Trialogue meeting on securitisation regulation, scheduled for 30 May, sources said. On Tuesday they will hammer out final details of the Simple Transparent Securitisation (STS) package at a gathering where it is hoped that a final decision on risk retention levels and CRR hierarchy will be reached.
David Quirolo discusses some of the challeges.
An excerpt from "All Eyes on Brussels as Policymakers Tackle Final STS Hurdles," CapitalStructure, May 26, 2017:
[C]rucial technical details will need to be ironed out in the coming months. In the meantime, securitisation professionals will have to navigate a period of uncertainty, warned CLO lawyer David Quirolo, a partner with Cadwalader, Wickersham & Taft.
"I'm hoping market sentiment will be favorable on the back of a positive conclusion to STS, but we have to keep an eye on the implementation date," said Mr. Quirolo. "After the STS regulation is passed, there will be new RTS [regulatory technical standards] to sort out and it will take some time for these to be finalised."
Mr. Quirolo said there is concern that if the regulation comes into effect, then the new standards would have to be applied retrospectively to deals using the old regulatory technical standards that close on or after that date.
"It will be difficult to complete new deals using the old RTS, while not knowing what the new RTS will be," he added. "A deal may no longer be compliant - it's a big problem that we're keeping an eye on. It could have an impact on issuance. The hope is that the implementation of STS is delayed so that the market can get a clear idea on the new RTS."
Richard Brand, Brian McGovern
Joseph Moreno, Anne Tompkins
Cadwalader is sponsoring this event, where Stuart Goldstein will moderate the panel on CRE CLOs.