PCS response to the PRA consultation on the output floor

Today, PCS submitted its response to the PRA on its consultation on how best to handle the introduction of the output floor pursuant to Basel 3.1 as it relates to securitisation. Although welcoming the PRA’s suggestions, PCS felt bound to point out that all the obvious difficulties that flow from a rigid application of the proposed Basel rules to securitisations – and especially SRT securitisations – flow from the original miscalibration of the capital requirements. More specifically, they flow from an incorrectly calibrated non-neutrality factor. This is then made worse by structural flaws in the current CRR architecture that results […]

PCS filed its response to the FSB's request for feedback on the success or otherwise of the G20 reforms of the rules surrounding securitisation. Although the FSB is a body with a global remit, in line with our social purpose and our area of expertise, PCS' response deals with the impact of securitisation regulations in Europe, including both the European Union and the United Kingdom. In view of the very short time provided by the FSB for comments - a mere three weeks - our piece is short and provides a high-level view of the impact of the current regulations […]

PCS responds to the Joint-Committee's Consultation on Sustainable Disclosure for STS

PCS has responded to the Joint-Committee of the European Supervisory Authorities on its consultation regarding the optional disclosure relating to sustainability of the assets securitised through an STS transaction. Our response can be read here. Acknowledging the very narrow mandate that had been given the Joint-Committee and the challenges this posed, PCS nevertheless believes that this was the wrong mandate, at the wrong time for far too narrow a sub-set of capital market instruments. Through no fault of the committee, this feels like another siloed regulatory endeavour that risks again punishing unnecessarily securitisation and tilting yet further an already unlevel […]

PCS’ response to the EBA consultation on synthetic securitisation: not just for securitisation nerds

PCS was glad to respond to the EBA’s consultation on the possibility of introducing an STS regime for synthetic securitisations. It may be found here. Notwithstanding that this topic may seem highly technical and of interest only for the hard-core enthusiast, we believe that it is – in fact – possibly one of the most important financial files in front of policy makers today. Even if you have little interest in the detailed responses to the specific proposals, we would invite everyone to read our general comments at the start of our response. (They are only three pages long). Broadly, […]

PCS responds to EBA and ESMA consultations

PCS has filed a response to the EBA’s consultation on the “homogeneity” criterion in the STS Regulation. The EBA’s general approach as disclosed by the consultative document is broadly sound and sensible. There is however some concern over how the fourth part of their suggested test (the “risk factors”) would work. In particular, PCS has some concerns over how issuers, investors and third party certification agents will be able to achieve a sufficient level of confidence in the choice of the relevant risk factor or risk factors. Our response does provide a possible solution which we think is both workable and […]

PCS responds to a disappointing Commission consultation on STS and LCR

PCS has filed a response to the European Commission’s consultation on possible changes to the Liquidity Coverage Ratio regime. The heart of the Commission’s proposal is the replacement of the current Level 2 securitisation assets with STS securitisations. As outlined in PCS’s response, this seems to us a disappointing suggestion. It is one that is difficult to reconcile with the intrinsic quality of STS securitisations on which the Commission itself and the European Parliaments and Council have worked so hard and with the desire of the European Union, through the Capital Markets’ Union project, to revitalise securitisation to fund European […]

PCS files its response to the Commission's consultation

Last week, the PCS response to the Commission's securitisation consultation was filed. PCS is strongly supportive of the Commission's approach. In our response we recommend that the process of crafting the definition of "simple, transparent and standardised" securitisation be anchored in the excellent work of the European Banking Authority. Our response also focuses on the issue broached by the Commission regarding the operationalisation of the potential new regulatory scheme. PCS had expressed the view that the success of the new regulatory scheme in revitalising a European securitisation market on a safe basis would depend not only on the definitions and […]

PCS files its response to the BCBS/IOSCO consultation on simple, transparent and comparable securitisations

PCS files its response to the BCBS/IOSCO consultation on simple, transparent and comparable securitisations. We view this work stream by the Basel Committee and IOSCO as a major and positive move towards a global approach to securitisation that is in line with our own analysis and the positions taken by the European stakeholders in the asset class, including many European policy makers. PCS very much hopes that this work will lead to a new global regulatory approach to securitisation that will help in the return of a strong worldwide securitisation market free from the build up of systemic risk that […]

PCS files its responses to the EBA consultation on simple, standardised and transparent securitisations

PCS filed yesterday its response to the EBA consultation on simple, standardised and transparent securitisations. This consultation marks a very strong and positive step towards the creation of a robust regulatory framework built around a definition of high quality securitisations. PCS welcomes the consultation and is supportive of the approach outlined by the EBA.

PCS responds to the ECB/Bank of England joint consultation

Last Friday, PCS filed its response to the ECB and Bank of England's excellent joint consultative document. The PCS Response to BoE/ECB consultation welcomes the proposed approach of defining high quality securitisation and providing some role for such a definition in the regulatory schemes. PCS also is broadly supportive of the principled based approach adopted by the Bank of England and the ECB. However, PCS also expressed its concern that the very weak securitisation market needs urgently a sense that new regulatory proposals are progressing in the right direction. Although we understand that the process of crafting regulations is a time […]

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