08 March 2011

IOSCO survey results on implementation of securitisation recommendations

The Technical Committee of the International Organisation of Securities Commissions (IOSCO) has published the results of a survey on the implementation of its September 2009 recommendations with respect to securitisation and credit default swap markets – Task Force on Unregulated Markets and Products – Implementation Report.

The major themes which emerged from the Task Force’s review were that:

• The skin in the game concept is endorsed by most jurisdictions at this time. Furthermore, the majority of member jurisdictions are expected to implement the requirement for originator/sponsors to retain long-term economic exposure to the securitisation;

• In many instances, current laws, regulations or market practices for offering documents often covered elements of disclosure and third party service providers. Most jurisdictions are either enhancing or considering enhancements for these areas;

• In relation to investor suitability, most jurisdictions are refining the definition of a sophisticated or wholesale investor. Depending on the jurisdiction, a greater burden will be put on the issuer/seller (to determine investor suitability) or on the investor (responsibility to buy products they understand); and

• Industry bodies such as the Association for Financial Markets in Europe, Japan Securities Dealers Association, Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais, Association of German Banks and Australian Securitisation Forum are working with regulators on various unregulated markets and products related initiatives.

Further Recommendations:

The Technical Committee, based on the survey responses and subsequent discussions, has made two further recommendations:

• TFUMP Recommendation 1 – IOSCO recommends regulators encourage improvements in disclosure standards for private or wholesale offerings of securitised products; and

• TFUMP Recommendation 2 – IOSCO recommends regulators engage in international cooperation towards convergence of national regulations, where desirable, and review progress regularly.

Press release

© IOSCO