Consultations The RBA's Response to the Consultation on Eligibility Criteria for CMBS and Other ABS, and Measures to Strengthen Privacy
On 2 October 2013, the Reserve Bank published for consultation new eligibility criteria for commercial mortgage backed (CMBS) and asset backed securities (ABS), alongside measures to strengthen borrower privacy under the Residential Mortgage Backed Securities (RMBS) reporting arrangements (for details see Media Release 2013-21). The consultation period closed on 28 October 2013.
The Bank received four submissions during the consultation period. This document sets out the Reserve Bank's response to the submissions received and finalises the new reporting requirements for CMBS and other ABS, as well as the measures to strengthen borrower privacy.
Eligibility Criteria for CMBS and other ABS
Industry feedback on the CMBS and ABS templates highlighted the cost and effort of drawing together data from various reporting systems. As a result, some submissions requested that the Reserve Bank delay the implementation date for the new reporting requirements for CMBS and ABS by 12-18 months after the 31 December 2014 implementation date for RMBS reporting requirements.
While the Reserve Bank is mindful of the costs faced by industry in order to meet the new reporting requirements, the Bank needs to be able to assess the risk of these assets as they have the potential to appear on the Bank's balance sheet. Therefore any delay in implementation needs to be kept to a minimum. Accordingly, the Bank has decided that an implementation date of 30 June 2015 for the new reporting requirements for CMBS and other ABS will apply. The number of affected securities is quite small. Moreover, it is consistent with the lead time provided for RMBS. From this date, reporting templates must be lodged with and validated by the Bank, and made publicly available.
Some respondents reported that too much data were required in the reporting templates – in particular the ABS pool-level template – or that some of the data fields were not applicable to particular CMBS or ABS transactions. This primarily reflects the fact that the ABS pool-level and CMBS loan-level templates are designed to capture the characteristics of financing contracts and underlying collateral for a wide range of CMBS and ABS transactions (that is, transactions backed by a multitude of physical assets including automobiles, office, agricultural and medical equipment). In instances where the data requested in a template are not applicable for that particular ABS or CMBS, the information provider is able to enter ‘NA’ in the data field (for more information on the applicable ‘No Data’ responses, refer to the ‘No Data’ options attached to the relevant template).
A number of small changes have been made to the pool-level reporting template for other ABS following the industry consultation. These have been explicitly identified in the pool-level template. All other ABS and CMBS templates are unchanged from their draft form.
Links:
Other ABS Pool level template mark up
Final templates:
- CMBS Transaction level data template
- CMBS Security level data template
- CMBS Loan level data template
- Other ABS Transaction level data template
- Other ABS Security level data template
- Other ABS Pool level data template
Proposals to strengthen borrower privacy for RMBS and other loan-level disclosures
The submissions received generally supported the proposed measures to strengthen borrower privacy. On the other hand, one submission expressed concern that the requirement to replace dates with calendar quarters in the public template would diminish the analytical usefulness of the data.
The Bank considers that the small loss of analytical usefulness in this instance is an appropriate trade-off in order to protect borrower privacy. As a result, the Bank is implementing the proposed amendments in full. In summary, these additional protections are:
- The last three digits of the property's postcode should not be reported in the publicly reported template (although it will be reported to the Reserve Bank).
- The property's Australian Bureau of Statistics Statistical Area (Level 4) (SA4) should be reported in the publicly reported loan-level template. This field should also be reported in the loan-level template reported to the Reserve Bank.
- Information providers should publicly report a pool-level postcode summary of 12 key loan-level fields. This table does not need to be reported to the Reserve Bank.
- Nine of the date-related loan-level data fields should be reported in quarterly calendar time in the publicly reported template. For details of the specific fields refer to the revised template.
Some submissions indicated that RMBS issuers would reserve the right to only meet in full the requirements of the publicly reported loan-level template on a case-by-case basis, mainly on the grounds of commercial sensitivity. In contrast, other submissions noted that some issuers may choose to provide some of the loan-level data in the publicly reported templates in a more granular level than is required.
As the RBA's reporting requirements seek to promote the provision of standardised information, while protecting the privacy of borrowers, RMBS issuers (or their information providers) are expected to meet the reporting requirements in full, including the complete reporting of loan-level data in the required format in the publicly reported template. Failure to do so may render the RMBS ineligible for repurchase agreement with the RBA.
Some submissions reported that the requirement to aggregate postcode-level data into Australian Bureau of Statistics Statistical Areas Level 4 (SA4) would add operational complexity to the requirement. However, the Bank believes that the publicly available mappings from the Australian Bureau of Statistics, and guidance in the revised loan-level template, should ensure that the task is relatively straightforward.
Links:
RMBS Loan level data template – updated for privacy
measures
RMBS Postcode Pool level data template
Domestic Markets Department
Reserve Bank of Australia
23 December 2013
Enquiries:
Media Office
Information Department
Reserve Bank of Australia
SYDNEY
Phone: +61 2 9551 9720
Fax: +61 2 9551 8033
E-mail:
rbainfo@rba.gov.au