The CMU is dead, long live the SIU!

Yesterday, the European Commission issued a communication on the Savings and Investments Union . For the cognoscenti of European policy, the Savings and Investments Union ("SIU") is not a new initiative but the rebranding of the project heretofore known as the Capital Markets Union or "CMU". So, the CMU is dead, long live the SIU! Reading the communication, as well as the attendant press release, the proposals to reform securitisation's legal and regulatory framework in a constructive manner remains part of the project. (To be found on pages 11 and 12, for those who wish to go straight to it). […]

And it begins... European Commission publishes its consultation on securitisation

The last few months have seen numerous calls by eminent people to takes steps to reform the regulations governing securitisations and thus revitalise of the market on a sound basis. Today the European Commission, by publishing its consultation. formally started the process that, with a fair wind, could result in those hoped for reforms. A (very) quick scan of the document reveals a number of things. First, it seems to be quite exhaustive, covering all the main topics identified as relevant. These include LCR eligibility, Solvency II and the possible addition of unfunded synthetics to the STS category, as well […]

Commission's report on the securitisation regulation is out - but the real battle is yet to come

The European Commission released its report on the review of the Securitisation Regulation on Monday. This was mandated by the Securitisation Regulation itself as part of a normal review process often found in European legislation. There was little to cause surprise to anyone who had been listening to the clear messaging coming from Brussels. The headline was that the Regulation having come into force in 2019 the Commission felt it was too early to tell whether it was working and so no meaningful changes were being proposed. Suggestions of changes to the disclosure rules were welcome, the rejection of a […]

Commission's Call for Evidence on Securitisation - progress...but ever so slow

In the securitisation consultation which closed last month, the Commission wrote that it would issue a call for evidence to the Joint Committee of the ESAs on the key unfinished parts of the STS reform - namely capital calibrations and LCR treatment. True to its word, the Commission has now issued this call for evidence (found here). The good news is that it seems to cover all the items needing to be covered including the capital calibrations for both bank and insurance investors and the treatment of securitisations for the liquidity coverage ratio. It also name checks the excellent report […]

European Commission consults on securitisation

In line with the traditional review process, the European Commission has issued a consultation on the functioning of the EU’s securitisation framework. The deadline for the consultation is 17 September 2021. PCS will be responding, of course, and strongly encourages all market stakeholders to express their views. This is potentially an important milestone in completing the reforms started in 2019 but left unfinished. Repairing the issues that remained a problem would greatly help revitalising a key financing tool for the European economy.

Long awaited homogeneity RTS is out

Today, the European Commission formally adopted the regulatory technical standard (RTS) on homogeneity which may be found here. In order for a securitisation to be STS, it must meet a lengthy series of criteria. One of these criteria is that the assets in the securitised pool must be homogeneous in character. Because of the difficulties inherent in defining something as elusive as “homogeneity”, this criterion was the only STS criterion for which the Commission was required to issue an RTS. This it did today. This does not mean though that this RTS is law as of today. Once adopted, it […]

A new joint-note shows the depth of consensus over the European Commission’s securitisation proposals

A note on STS securitisation signed by 32 associations and market participants sets out aspects of the Commission’s simple, transparent and standardised securitisation proposals that would need modifications if the project is to revive the European securitisation market. The joint-note on STS securitisation, together with a similar joint position paper published by AFME/EFAMA/ICMA and Insurance Europe, shows the very strong, and unusual, degree of consensus amongst stakeholders over the additional steps necessary to allow securitisation to help fund the European economy. The signatories of the note – and the earlier joint position paper – represent issuers and investors, large and small […]

Insurance Europe publishes its response to the Commission's proposals on STS securitisation

Insurance Europe, the representative body of the European insurance industry, has published its response to the Commission's STS securitisation proposals. As with many stakeholders in European finance, Insurance Europe is favourable to the Commission's approach to reforming the regulations around securitisation through the STS definition. In common with most other voices in this debate, including PCS, it believes the proposed STS definition is broadly correct and workable. The response does focus though on some of the same issues to which we, at PCS, had drawn attention. These include the non-neutrality of capital charges. The inexplicably high degree of non-neutrality which […]

Oudea skeptical about the Commission’s proposals

Reuters has published an article quoting skeptical remarks made by Frederic Oudea, the boss of Societe Generale, on the impact of the Commission’s securitisation proposals. After an initial welcome of the Commission’s plans, these statements reflect the growing concern of many that despite 85% of the proposals being excellent, the 15% in need of further work may still derail the Commission’s ambition for a revived market. Investors concerns around the lack of a “common language” provided by third party certification, issuer concerns with the nature of the attestation required of them, general concerns about the issue of how a complex definition will […]

Commission’s securitisation proposal is out

Today, the European Commission published its proposals on securitisation within the Capital Markets Union project. Based on an earlier draft leaked by the Financial Times, there was much to commend the Commission’s approach, some items to keep an eye on and some issues which were serious enough to have the potential to derail the chances of market recovery altogether. First, the Commission should be commended for a number of very positive aspects: (a) there is a definition of simple, transparent and standardised (STS) securitisation to be used to bifurcate the regulatory outcomes for this financing channel as a whole; (b) […]

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