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Recital 25

Recital 25

(25)Only high quality credit protection agreements should be eligible for STS on-balance-sheet securitisations. Unfunded credit protection should be ensured by restricting the scope of eligible protection providers to those entities that are eligible providers in accordance with Regulation (EU) No 575/2013 and are recognised as counterparties with a 0 % risk-weight in accordance with Chapter 2 of Title II of Part Three of that Regulation. In the case of funded credit protection, the originator as protection buyer and the investors as protection sellers should have recourse to high quality collateral, which should refer to collateral of any form which may be assigned a 0 % risk weight under that Chapter, subject to appropriate deposit or custody arrangements. When the collateral provided is in the form of cash, it should be held either with a third-party credit institution or on deposit with the protection buyer, subject in both cases to a minimum credit quality standing.

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