European Securities and Markets Authority peer review recommends stronger and more structured national supervision of STS securitisations

The European Securities and Markets Authority (ESMA) published a peer review of how selected National Competent Authorities (NCAs) supervise Simple, Transparent and Standardised (STS) securitisations, setting out recommendations to strengthen supervisory practices and promote EU-wide convergence under the STS framework. The review assessed the supervisory approaches of AMF (France), BaFin (Germany), CMVM (Portugal) and De Nederlandsche Bank (the Netherlands) across both STS transactions and the activities of originators, sponsors and securitisation special purpose entities. ESMA recommends that NCAs combine transaction-based and entity-based supervision, tailored to the size of their securitisation markets, and expand current practices to better identify, assess and address risks arising from STS securitisations. It also finds that some authorities would benefit from a more structured supervisory framework, a clearer risk-based approach and sufficient resourcing for STS supervision. The recommendations are intended to support all EU NCAs, including those more recently designated or still awaiting designation. ESMA will continue EU-level convergence work and expects to carry out a follow-up assessment in the future to evaluate progress against the recommendations and track developments in STS supervision across jurisdictions.