13 February 2015

EFAMA comments on criteria for identifying simple, transparent and comparable securitisations

EFAMA presented its views on BCBS/IOSCO’s proposals for setting criteria which will facilitate the analysis of each securitized instrument by financial market participants in identifying securitization structures of greater transparency.

EFAMA believes that the proposed criteria are not sufficient to restore confidence and invest into securitised instruments. Several other elements should also be taken into account:

• The stability of the criteria and the stability of the values all along the life of the securitized instrument
• The need to standardize further regulations in order to reduce the regulatory obstacles to securitized products or to align their requirements with those applied to other asset classes like, for example, covered bonds
• The alignment of legislative requirements (e.g. some securitized instruments are allowed in UCITS but not in AIFMD) and the treatment of securitized instruments in the calculation of regulatory capital requirements for securitization positions which are significantly stricter

With regards to asset selection and transfer, EFAMA believes that the exclusion of actively managed assets is not appropriate. In EFAMA’s view, the proposed exclusion of actively managed assets or selected on a discretionary basis is not appropriate for the purpose of identifying STC securitisations. A portfolio which is actively managed by a regulated manager having a good track record is, from various perspectives, similar to a non‐actively managed portfolio made of assets having good performance history.

EFAMA further notes that the regulatory capital treatment for securitization positions put ABS bonds at a disadvantage compared to other asset classes like, for example, covered bonds and hence forms a major obstacle for the development of short‐term securitization markets.

Full position paper

© EFAMA - European Fund and Asset Management Association