European Commission publishes today a Green Paper on the Capital Markets Union together with a new consultation on securitisation

Today, the European Commission publishes its Green Paper on the Capital Markets Union. In the paper its sets out five priority for early action, of which the building of a sustainable securitisation market is one. Underlying the seriousness with which the Commission is approaching the securitisation brief, together with the Green Paper was published a consultation on securitisation. This consultation, with a May 13 deadline, requests stakeholder views on the notion of a bifurcated approach to the regulation of securitisation similar to that which PCS has been advocating since its inception. In particular, the consultation explicitly addresses the possibility of […]

European Commission publishes the delegated acts for Solvency II and the LCR

The European Commission has published the delegated acts on Solvency II and the Liquidity Cover Ratios. Whatever quibbles one may have, it is crucial to recognise the enormous progress achieved by the European Commission in defining high quality securitisation and reflecting its outstanding performance in regulations. This is a positive outcome that was far from predictable barely a year ago. On Solvency II, they have maintained the division between the treatment of Type 1 and Type 2 securitisations but have now completely flattened the curve for all the Type 1 securitisations below the most highly rated. Whereas the most highly rated require […]

Juncker gives new EU Commissioner for Financial Services, Financial Stability and the Capital Markets Union specific mission to revive HQS markets

In addition to the news of Lord Hill’s appointment as the EU's Financial Services, Financial Stability and Capital Markets Union Commissioner, we also wanted to highlight that Lord Hill has been tasked amongst his specific objectives to seek “appropriate ways to revive sustainable and high quality securitisation markets”. See attached public letter from Juncker to Hill.

European Commission requests the advice of the EBA on "high quality securitisation"

The European Commission has stated that it had put a formal request for advice with the European Banking Authority for the authority's views on the possibility of defining a category of "high quality securitisations" to be used in banking regulations. This could presage the possibility of the various banking regulations mandated by the CRD and the CRR following a similar approach to that outlined in the recent EIOPA report on the capital requirements for insurance companies. In its recent proposals, EIOPA defined a high quality securitisation category with lower capital requirements. This approach, which PCS has long advocated, opens the […]

EU Commission publishes a communication on long-term financing: strongly supportive of high quality securitisation and harmonising regulations

Today, the EU Commission published its communication on long-term financing. Both this document and Commissioner Barnier in his press conference put strong emphasis on reviving the securitisation market. Even more importantly, the document identifies the need to craft a definition of high quality securitisation and to harmonise all the relevant regulations around this definition. This is a position that PCS has long advocated and strongly welcomes. It matches very closely both the work that PCS does and its mission. We urge all stakeholders in the securitisation market to rally behind this approach that now has clear support from policy makers […]

European Commission holds public hearing on LCRs - negative signalling on securitisation

Yesterday, March 10th, the European Commission held a public hearing in Brussels on the leverage ratio and LCRs. The meeting was attended by over 200 stakeholders. On the much raised issue of the inclusion of securitisations in the definition of high quality liquid assets, the Commission said it was open to reviewing the matter, but also indicated that it was not minded to change the position outlined in the EBA report. Citing the desire to stick to the Basel recommendations, the Commission also indicated that it was aware of the arguments that had been raised over the EBA's report and […]

European Commission releases draft new rules for money market funds

Today, the European Commission released its new draft regulation for money market funds (MMFs). The relevant texts can be found here. The regulation will be important for securitisation as it lists, inter alia, the assets that European MMFs are allowed to purchase. In the draft, these assets are limited to securitisations with less than 398 days to run and exclusively backed by corporate debt which, itself, has less than 398 days to run. This is a matter of some concern as this appears to define safe and high quality securitisation by reference to the underlying asset class (corporates). It is […]

European Commission publishes a Green Paper on long-term financing of the European economy – securitisation is mentioned as one of the financial channels that could unlock additional long-term funding

Today, 25th March 2013, the European Commission publishes its Green Paper on the long-term financing of the European economy. The Green Paper contains very positive comments on securitisation, including the following paragraph: "Reshaping securitisation markets could also help unlock additional sources of long-term finance. Subject to appropriate oversight and data transparency, they can help financial institutions free capital, which can then be mobilised for additional lending, and manage risk. Market-based initiatives to stimulate securitisation markets include emerging labels for high quality, transparent and standardised securitisations. There is scope to develop simple securitisation products based clear and unleveraged structures, using well-selected, diversified and […]

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