11 July 2018

PCS: Helping transition to the STS Regime

The first is a broad introduction to the new regime, which tries to focus on key aspects – rather than being a laundry list of rules. The second document focused directly on the role of third party certification agents within the new STS architecture.

3PCAs are regulated at the national level by national competent authorities. Although which national authority will regulate 3PCAs in each country is still to be decided in the national capitals, it is anticipated that the role will fall to the local capital markets’ regulator.

Once regulated in one European Union country, a 3PCA will be authorised to verify STS certifications across the whole EU.

3PCAs may not be banks or rating agencies.

3PCAs may not provide audit, advisor or equivalent services to the originator, sponsor or SSPE in securitisations they certify.

3PCAs may not engage in activities that compromise their independence.

3PCAs must charge cost-based, non-discriminatory fees.

3PCAs must have at least two independent directors.

The STS Regulation became law in the United Kingdom in December 2017. As such, it is extremely likely that it will remain part of UK law following Brexit in accordance with the provisions of the Withdrawal Act.

As a result, the full STS regime, including its third party certification agent provisions, will remain part of the British capital markets following any exit from the European Union.

Document on the introduction to the STS regime

Document on third party certification agents

© PCS