STS Criterion 5. No transferable securities

Description

No transferable securities

Content

The underlying exposures should not include transferable securities, as defined in point (44) of Article 4(1) of Directive 2014/65/EU, other than corporate bonds that are not listed on a trading venue.

Rationale

See overarching rationale for consistency with traditional qualifying framework.

Excluding transferable securities other than corporate bonds that are not listed on trading venue is particularly important in the case of synthetic transactions as it ensures that the proposed STS framework only targets ‘balance sheet’ transactions, as opposed to ‘arbitrage’ transactions that were structured in the past to include different types of securities as underlying exposures.