Implementation Timetable
For all asset classes, the publication of all transaction documents will become an eligibility requirement from July 2011. For each asset class there will be a twelve month implementation period for all other requirements following publication of the detailed requirements for the respective asset class.
For RMBS and covered bonds backed by residential mortgages, for which the full set of detailed requirements are being published today, the implementation period for the remaining eligibility requirements will commence with this Market Notice and end on 30 November 2011.
Securities not meeting the new transparency requirements will continue to be accepted during the implementation period, without penalty. The Bank expects issuers who intend for their securities to be eligible for use as collateral with the Bank to use this period to put in place the systems and processes required to enable compliance with the criteria. The Bank encourages early compliance where possible to allow sufficient time to deal with any problems encountered in meeting the criteria.
Following the implementation period, there will be an additional twelve month transition period, during which securities not meeting the new requirements may remain eligible, though will be subject to increasing haircuts. Specifically, an additional 5 percentage point haircut will be applied at the beginning of this transitional period, and the haircut will increase by an additional 5 percentage points every month during the transition, as set out in Annex C. This haircut will be applied to any security within the relevant asset class until the Bank deems that the security meets all the transparency requirements.
Securities delivered as collateral in the Special Liquidity Scheme which do not meet the new requirements may remain eligible until the end of the Scheme and will not be subject to this additional haircut.
Any securities not meeting the criteria by the end of the transition period will be ineligible for use as collateral in any of the Bank‟s operations.
For RMBS and covered bonds, the transition period for both UK and non-UK transactions, will begin on 1 December 2011 and end on 30 November 2012.
The Bank will publish further Market Notices throughout the course of 2011 setting out the requirements for the other asset classes eligible in its operations. An equivalent transition period will apply to these asset classes.
For the full Market Notice, please download the below PDF:
Market notice