The European Commission (EC) is reviewing possible changes to the securitisation market, alongside its green paper on the proposed capital markets union (IAR, 19 February, EC green paper could change treatment of long-term investments).
The EC published a consultation paper that asks what the best ways are to create a sustainable EU high quality securitisation market relying on simple, transparent and standardised securitisation instruments could bridge banks and capital markets.
According to the EC it is looking at a number of areas, including:
- restarting markets on a more sustainable basis, so that simple, transparent and standardised securitisation can act as an effective funding channel to the economy;
- allowing for efficient and effective risk transfers to a broad set of institutional investors as well as banks;
- allowing securitisation to function as an effective funding mechanism for some non-banks as well as banks;
- protecting investors and managing systemic risk by avoiding a resurgence of the flawed "originate to distribute" models.
Like the green paper, the consultation paper does not lay out specific proposals but instead asks a series of questions about the securitisation market. On the basis of the feedback received, the EC will put forward a proposal on how to build a sustainable securitisation market. No further timetable has been detailed.