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 consuming one and we further understand that some of the forthcoming rule making (such as Solvency 2 and the LCR requirements) may have to be enacted in sub-optimal form due to timing constraints, it is vital for the survival of the securitisation market that policy makers indicate clearly that these rules are effectively in an interim stage and that further work will be done, with all required speed, to create a safe regulatory environment that reflects the intrinsic strengths of quality securitisations.
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