The Basel Committee's revised proposals for a new risk-weighting framework for securitisation transactions were subject to a comment period which ended on 24 March 2014. Following a lengthy discussion process amongst members, the Global Financial Markets Association (including the Association for Financial Markets in Europe), together with seven other trade associations, has published a detailed response to the Basel Committee's proposals, setting out a series of extensive comments on the proposals along with a set of detailed Annexes which provide supporting data, quantitative analysis and calibrated examples for its response. In summary, the trade associations' position is that the proposed capital requirements for securitisation exposures remain much higher than justified, and will likely discourage banks from investing in, originating or sponsoring securitisation transactions. The trade associations' detailed recommendations focus on creating a simpler, more transparent framework that better aligns securitisation risk weights with empirical data, competing products and underlying risks. Now that the comment period has closed, the Basel Committee will be reviewing the detailed consultation responses, and (taking into account further discussions to be held at a hearing in early April), we can expect to see the Basel Committee's final proposals later in 2014. A summary of the proposals set out in the Basel Committee's Second Consultative Document was contained in Edition 8 of this Briefing.

Useful links

GFMA: Joint Trade Associations' Response