On 16 October 2019, the European Commission adopted European Securities and Markets Authority’s (ESMA) regulatory technical standards (RTS), which prescribe applicable templates and other operational requirements for transparency and disclosure under the European Securitisation Regulation.
Disclosures and reporting required under Article 7 for most Collateral Loan Obligations (CLOs) include:
- disclosure of all essential transaction documents;
- transaction summaries (pre-pricing in initial draft form and on closing in final form) describing key characteristics of the deal; and,
- quarterly template-based loan-level and investor reporting.
For public CLOs there is expected to be an additional disclosure requirement for significant events and/or inside information, which has to be made without delay.
The final templates will likely come into effect early in the first quarter of 2020. The Regulation requires new data on assets to be made available. As a typical CLO will have over 100 assets, dealing with the volume of data will be challenging.
As a result, in just a few short months the CLO market must ready itself for a significant shift from existing reporting practices. The prospect of this shift raises several questions for the CLO market:
- What do European CLO issuers, sponsors, originators and administrators need to know?
- What is the impact of Article 7 and its transparency and disclosure requirements and what are the implications of Brexit for Article 7?
- What is the timeline and what will participants in the CLO industry need to do? There are practical steps you can begin to take now to ensure you are prepared.
- How can your CLO administrator help you to prepare for the new reporting requirements via an authorised securitisation repository?
BNY Mellon is here to help you support these new reporting requirements. Read our Q&A “European Securitisation Regulation: What’s Next For CLOs” to find out more.