European Parliament proposes positive amendments to the draft money market funds legislation

The complete set of amendments proposed by members of the European Parliament to the draft money market funds legislation has just been published. As readers will recall, the original draft was extremely restrictive as to the types of securitisations that could be purchased by MMFs - basically short dated corporate loans. A number of key MEPs have now tabled amendments. Particularly notable were the extension of the types of securitisations that MMFs could purchase proposed by Jean-Paul Gauzes, Wolf Klinz and Sharon Bowles. All three amendments request ESMA to define the types of securitisations that MMFs can invest in. Especially […]

Two publications from the EBA on securitisation - one set of final draft technical rules and a consultation

Yesterday was a busy day for the European Banking Authority on the securitisation front with the publication of two paper. First, they published their final draft regulatory technical standards on securitisation retention rules and related requirements (together with final draft technical standards on the convergence of supervisory practices related to the implementation of additional risk weights in the case of non-compliance with the retention rules). Secondly, it published a public consultation on draft guidelines for assessing significant risk transfer for securitisation transactions. These guidelines are to be part of the EU Single Rulebook in the banking sector. The public consultation runs until […]

Financial Times publishes a letter on securitisation from AFME

Today's Financial Times contains a letter from Simon Lewis, Chief Executive of the Association for Financial Markets in Europe, setting out the conditions for a return of securitisation in Europe. PCS is explicitly cited. The letter may be found here (behind a paywall)

In a draft report on long-term financing, the European Parliament recognises the importance of securitisation and calls for a definition of "high quality securitisation"

In its draft report on long-term financing of the European economy the European Parliament's Committee on Economic and Monetary Affairs has made key positive statements regarding securitisation and called for a definition of "high quality securitisation". In particular, the report stated: the Committee "believes that securitisation can play an important role in financial intermediation; encourages efforts to securitise high-quality assets while avoiding structures of high complexity; notes that there is scope for more standardisation and transparency; calls on the Commission to follow closely the activities of the International Organisation of Securities Commissions-Financial Stability Board working group on securitisation and to develop a […]

Another Financial Times article indicating the return of investor appetite for European securitisation

On November 3rd, the Financial Times ran an article entitled: "Asset-backed paper:too much, too soon?". Despite its ambiguous title, the thrust of the article is that investors are showing renewed interest for the European securitisation market. The article mentions the excellent credit performance of European ABS but also draws attention to the impact on issuance of very loose monetary policy by central banks. The article may be found here (please note it lies behind a paywall)

EBA's LCR approach to ABS is coming under fire

Following the October 23rd public hearing held by the EBA on the liquidity cover ratios (LCRs), the authority's approach to ABS seems to be coming under a growing amount of public criticism. This can be seen, for example, in this article published by Euroweek here.

Timely Standard & Poor's report entitled: "European Securitization Could Fund More Lending, If The Regulatory Stance Softens"

After a week that saw a clear indications from the Bank of England of a desire to rebuild securitisation but also very negative signalling from the EBA as to the position of securitisation in the liquidity rule, Standard & Poor's has published a timely article highlighting the divergence between the flow of regulatory developments and policy makers' intentions to see securitisation play a positive role in the European economy. Entitled "Underwriting The Recovery: European Securitization Could Fund More Lending, If The Regulatory Stance Softens", the article speaks to the improving image of securitisation but the crucial importance of the regulatory […]

EBA presentation on LCR

As indicated in yesterday's News item, the EBA had undertaken to place their presentation on LCRs at the public hearing on their website. This has now been done and the presentations may be found here.

EBA has a public hearing on the LCRs. No good news for securitisation

Today, the EBA held a public hearing on the LCRs generally. The meeting was somewhat unusual in that the hearing was on two EBA reports where no drafts had been circulated. The EBA did apologise for this, citing brutal time pressures. As a result, the hearing took place over slides that were shown for the first time at the meeting itself. The EBA was also at pains to indicate that these slides represented a draft of the report to be presented and not the final conclusions. The EBA indicated that the slides would appear on their website, although they do […]

ECOFIN discusses proposals to use securitisation with some public money as a way to provide European SMEs with access to finance

At its meeting in Luxembourg on 15th of October, the European Ministers of Finance discussed a proposal made by the Commission and the European Investment Bank to help the access to finance of SMEs. The proposal contains three options, two of which involve securitisation. The securitisation options, similar in many respects to the proposal made by PCS in its response to the Commission's Green Paper on Long Term Funding, would involve the use of public money to take out the highest risk tranche. The official press release may be found here.

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