Reviving the EU securitisation market – what happens next?
DCM Focus Series
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Readers of Mario Draghi’s report on EU competitiveness (see our recent article), which called for the revival of the EU securitisation market, may ask how these proposals will play out. Longer term outcomes are difficult to predict but nearer-term milestones were signalled by ESMA Chair Verena Ross in her speech on 23 September.
- EC Consultation on the Securitisation Framework: A Commission public (Level 1) consultation on the functioning of the securitisation framework is to open “in the coming weeks”
- ESMA Consultation on Due Diligence Rules: An ESMA public consultation on “draft Guidelines intended to introduce, where the current securitisation regulation allows for it, more proportionality in the application of the due diligence rules”
- ESMA Feedback Statement on Disclosure Requirements: ESMA is preparing to publish a feedback statement based on the Consultation Paper launched last December, which will propose amendments to the ESMA technical standards and focus on the introduction of proportionality (especially regarding private securitisations).
So what will be on ESMA’s wish-list? Ross envisages a “combination of measures” rather than a silver bullet. Acknowledging “[i]t is clear that the framework established a few years ago has not produced all the expected results,” the speech contains several clues as to where ESMA believes the most room for improvement lies. Disclosure and transparency requirements are front and centre, with aspirations such as:
- Introducing proportionality within the transparency framework
- Reducing the disclosure burden for sell-side parties while ensuring that data usability for investors and supervisors is meaningfully improved
- Simplification and harmonising of reporting regimes
- Tackling overly prescriptive and burdensome disclosure requirements
It appears that the starting pistol has now been fired to initiate a wider discussion on the environment for securitisation in the EU, which lags behind the US market.
Watch this space.
View Verena Ross’ keynote address at AFME's 8th Annual European Compliance and Legal Conference
The content of this article is provided for information purposes only and does not constitute legal or other advice.
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