BCBS and IOSCO release their proposed definition of simple, transparent and comparable (STC) securitisation

Today, the Basel Committee on Banking Supervision and IOSCO have released the report containing their proposed definition of simple, transparent and comparable (STC) securitisation.  PCS will be reading these with great interest.  A brief, preliminary and cursory look reveals similarities with the EBA’s recent advice to the Commission.

Also noteworthy is the statement in the press release accompanying the report that “[a]lthough the criteria are not, of themselves, a prescription for regulatory action, the Basel Committee is exploring how these criteria could be incorporated into the securitisation framework revised in December 2014”.  This is official confirmation of developments that had been verbally communicated to the market: namely that the STC work would indeed likely lead to a new set of Basel capital calibrations.  Such calibrations would be set, presumably, in a framework which incorporated differential treatment for STC and non-STC securitisations.  This is, of course, the approach being introduced in the European Union and is a confirmation that this approach, which PCS has advocated since its inception, may well become the new global framework for securitisation regulation.