The European Securities and Markets Authority (ESMA) has just published a consultation on the revision of the disclosure framework for private securitisation under Article 7 of the Securitisation Regulation. The deadline is March 31.
Although any improvement on the over-burdensome disclosure regime for securitisations is welcome, this consultation has left some of us more confused than hopeful. First, it is limited to "private" securitisations - legally defined as securitisations that do not require a prospectus under the Prospectus Regulation. Since much of the policy discussions around reviving securitisations from Lagarde to Draghi have centred on growing the capital markets by mobilising European savings to fund the economy, this consultation appears to do nothing whatsoever for that segment of the market: high quality bond format true sale securitisations. It is also unclear how this consultation fits in with the European Commission's publicly announced aim of publishing a proposal for a thorough revision of the entire securitisation framework by early summer. Revision of the disclosure regime was always believed to be one of the elements of this proposal. Is this consultation part of the Commission's plans? Is this a separate exercise? If it is a separate exercise, will it be superseded by the Commission's proposals?
Also, the consultation does not deal with the key issue of the definition of "private" securitisations. Yet many market participants have queried the definition. So much so that the possibility of amending it was canvassed by the Commission in its recent consultation (paragraph 5.10). Indeed, in its own response, PCS reiterated its view that the current definition needs a radical overhaul. So, when answering ESMA's consultation, are stakeholders invited to assume no change to the definition? Or should they respond based on their own preferred amended definition? Would it have made more sense to wait until the Commission's initial proposal so as to canvas the possible approaches to the potential different definitions?
Additionally, the consultation appears explicitly to assume that any lightening of the disclosure burden would not apply to non-EU transactions. But, as with the definition of "private", the issue of the treatment of non-EU transactions is a key element of the debate around disclosure. So, do stakeholders answer the consultation assuming no changes will be made to the regime applicable to such transactions? Would the answers become invalidated if a change is proposed in the Commission's summer document?
We admit to some difficulty in understanding the timing and restricted scope of this consultation. But as the saying goes: "Ours is not to wonder why...". We will therefore read the proposal with care and respond to the best of our abilities.
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