MADISON, Wis.–Changes recommended by the World Council of Credit Unions have been included in two finalized standards by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.
The standards relate to regulatory requirements and capital treatment for short-term securitizations, such as asset-backed paper.
Key changes in the final standards that were urged by World Council in its comment letters (which are available here and here) included reducing an institution’s minimum performance history to qualify for short-term securitization eligibility from five years to three years and clarifying that credit and liquidity support to an asset-backed commercial paper structure can be performed by more than one entity.
Also at World Council’s urging, the Basel Committee and IOSCO clarified that equipment leases and auto loan and lease securitizations can be used as collateral under the short-term securitizations framework.
Provision Removed
Separately, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) removed a provision from pending European Union (EU) legislation that would have required the European Commission to review credit unions’ exemptions from the EU’s version of Basel III every five years and recommend whether or not the exemptions should be abolished, WOCCU reported.
The European Network for Credit Unions has advocated for the removal of this exemption review clause from the draft directive since its proposal by the Commission in November 2016.
Currently, noted WOCCU, credit unions in most EU Member States are exempt from the EU’s Basel III capital requirements and these exemptions allow Member States to establish non-Basel-III, national-level credit union rulebooks without any periodic reviews.
“The ECON Committee’s removal of the exemption review clause from the draft directive makes it all but certain that it will not be included in the Parliament’s final draft of the law,” the World Council reported.