AFME: High quality securitisation for Europe - The market at a crossroads
09 June 2014
AFME issued a report on how to revive the securitisation market, according to which Europe needs stronger capital markets to serve the real economy and fill the funding gap caused by regulatory constraints affecting banks' lending.
"High-level statements of support from central banks and policymakers are extremely welcome", comments Simon Lewis, AFME Chief Executive, "but they need to be translated into positive developments in the reality of regulation. AFME is calling for urgent coordinated action by European policymakers to reconsider the treatment of securitisation." The call comes as key regulators, policymakers and the structured finance community are getting ready to meet at the Global ABS 2014 conference organised by AFME and the Information Management Network in Barcelona on 10-12 June.
In order to save Europe's securitisation market, AFME proposes a five step action plan:
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Recalibrate the rules for risk-weighted assets for bank investors in securitisation set out in the December 2013 Basel Committee re-proposal, so as to reflect the good historic performance in Europe, and bring securitisation into line with other fixed income securities and underlying asset pools;
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Lower the capital charges for insurance companies seeking to invest in securitisation, set out in the December 2013 EIOPA report, to create a comparable playing field with other fixed income securities such as corporate and covered bonds, and direct investment in the same assets;
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Include a wider range of high quality securitisations as High Quality Liquid Assets under the Liquidity Coverage Ratio. Until now only certain types of RMBS have been proposed for eligibility;
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Acknowledge the progress already made in improving transparency and disclosure, build on this work, and avoid new and intrusive regulations that are not aligned with existing practice and which create duplication and confusion in a market which already has very high standards of transparency;
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Ensure better coordination between regulators and internationally to prevent the "layering" effect of overlapping regulations and promote mutual recognition of equivalent standards.
Full press release
© AFME
