Instruction No. 8/2026 Repealing Instruction No. 7/2019

Instruction No. 8/2026
BO No. 8/2026 Supplement • 26-08-2026
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Topics
Supervision :: Supervision
Mod. 99999940/T – 01/14
Index
Text of the Instruction
Text of the Instruction
Subject: Repeal of Instruction No. 7/2019

Instruction No. 7/2019 was issued by the Bank of Portugal with the objective of incorporating into the national legal order the EBA/GL/2018/08 and EBA/GL/2018/09 Guidelines of the European Banking Authority (EBA). Those Guidelines regulate the STS (simple, transparent, and standardized) criteria applicable to asset-backed commercial paper (ABCP) and non-ABCP securitization transactions.

With Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017, which established a general framework for securitizations, specific rules were also created for transactions that may be qualified as simple, transparent, and standardized (STS criteria), promoting greater transparency and rigor in the European financial market. The EBA Guidelines aim to harmonize the interpretation of the STS criteria.

The Instruction determined that credit institutions acting as institutional investors, sponsors, or initial lenders should implement practices ensuring compliance with the due diligence obligations provided for in Article 5 of Regulation (EU) 2017/2402. This requirement included a rigorous assessment of STS securitization transactions and associated risks, not limiting itself to relying exclusively on notifications or information provided by participants in the transaction. Furthermore, the responsibility of the Bank of Portugal as the supervisory authority under paragraph 1 of Article 29 of Regulation (EU) 2017/2402 to verify the compliance of these practices was highlighted.

In 2021, within the framework of the "Capital Markets Recovery Package" initiative, amendments to Regulation (EU) 2017/2402 entered into force that allowed the extension of the scope of STS criteria to on-balance sheet securitizations. In order to achieve greater uniformity in the interpretation of these criteria by competent authorities, a mandate was included in the amendment to the Regulation for the EBA to develop Guidelines.

The EBA/GL/2024/05 Guidelines not only detail the STS criteria applicable to on-balance sheet securitizations but also revised and consolidated the requirements established by the EBA/GL/2018/08 and EBA/GL/2018/09 Guidelines applicable to traditional securitizations. The Guidelines specify and harmonize the application of simplicity, transparency, and standardization criteria, and also those relating to credit protection agreements, verification agents, and excess spread synthetic arrangements. Furthermore, they reinforce the importance of consistent practices and rigorous risk analysis to ensure compliance and reduce uncertainty in the securitization market. Indeed, they aim to harmonize practices in the European market, promoting greater confidence in issued STS securitizations.

The recipients of the Guidelines include financial institutions, but also competent authorities. However, regarding the latter, the EBA promoted an alteration in the recipients, restricting them only to competent authorities responsible for monitoring the STS criteria as designated under paragraph 5 of Article 29 of Regulation (EU) 2017/2402.

Without prejudice to the fact that the amendments to the EBA/GL/2018/08 and EBA/GL/2018/09 Guidelines apply only to securitizations issued from their respective application date (i.e., 9 December 2024), it should be understood that the restriction on the scope of recipients applies to all securitizations in force on that date, under penalty of generating legal uncertainty and unequal treatment between transactions and supervised institutions. It should be noted, however, that, in substance, the content of the duty to comply with the prudential due diligence requirement, provided for in Article 5 of Regulation (EU) 2017/2402, remains unchanged, with investors and, in the case of ABCP securitizations, the sponsor, remaining bound to assess the risk inherent in the securitization transactions in which they invest or provide support, taking into account, if applicable, the specifics arising from the STS criteria.

In Portugal, the responsibility for supervising STS criteria was legally assigned to the Securities Market Commission (CMVM), through the combined reading of point (e) of paragraph 1 of Article 66-A of Decree-Law No. 453/99 of 5 November (which establishes the legal regime for credit securitization), and paragraph 5 of Article 29 of Regulation (EU) 2017/2402.

Thus, since the Bank of Portugal is not one of the competent authority recipients of the Guidelines, the application of Instruction No. 7/2019 is no longer justified. The duties of cooperation between competent authorities remain valid, and to these the Bank of Portugal will resort whenever considered necessary, in fulfillment of its respective supervisory duties attributed by Regulation (EU) 2017/2402.

In these terms, the Bank of Portugal, using the competence conferred upon it by point (e) of paragraph 1 of Article 29 of Regulation (EU) 2017/2402, by Article 17 of its Organic Law, approved by Law No. 5/98 of 31 January, and by point (f) of paragraph 1 of Article 116 of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No. 298/92 of 31 December, determines the following:

Article 1.
Repealing Norm
Instruction No. 7/2019 is repealed.

Article 2.
Entry into Force
This Instruction enters into force the day following its publication.