LONDON, Feb 1 (IFR) - European originators risk their
securitisations being struck off the ECB's register of eligible
collateral thanks to legal concerns about contracts with the
European DataWarehouse (ED), the market infrastructure designed
to promote transparency by providing loan-level data.
The Association for Financial Markets in Europe (Afme) has
asked the ECB whether it could be flexible about its deadline
for data submission and what sanctions would apply to
originators that missed the deadline, according to a senior
securitisation source at an Afme member institution.
Afme made the request because it anticipated that legal or
compliance issues with the original ED contract could make its
members miss the deadline.
These issues were largely about the extra liabilities which
could be created by submitting the data to the ED. Originators
were concerned this liability could go beyond the
representations and warranties already in deal documentation.
ED has clarified that submitting loan level data should not
create additional liabilities for originators, but negotiations
are progressing between originator legal departments and ED,
which wants a standard contract between sellers and the ED.
There have also been discussions about data protection,
centred on whether ED would transfer any data, particularly
about company details, to non-European Economic Area countries.
The big concern for member institutions is that their ABS
collateral will cease to be ECB-eligible if they do not sign
contracts and submit loan-level data in time. The ECB deadline
for deals is either one month after the first interest payment
date following January 3, or the end of March, whichever is
The ECB has not said whether deals can remain eligible after
this point. Current market understanding suggests it will be on
a deal-by-deal discretionary basis.
Once legal issues are dealt with, uploading deal information
should be straightforward if originators have it ready to go.
The ED is uploading around 20 deals a day to its database, and
can accelerate this process if needed. The total universe of ECB
eligible ABS tranches stands at 1140.
Originators have to pay an EUR8k one-time registration fee,
plus a EUR6k annual maintenance fee. These levels are halved for
non-ECB securities, though the work is the same for the European
Institutional investors can get direct access to the data
for EUR500 per year, and several of the larger investors have
already signed up.
(Reporting By Owen Sanderson, editing by Julian Baker)