Industry responds on simple securitisations: GFMA and other industry associations have responded to the consultation of the Basel Committee and the International Organisation for Securities Commissions (IOSCO) on criteria for identifying simple, transparent and comparable (STC) securitisations. They support the transaction-based approach adopted in the consultation, as under a tranche-based approach only the most senior tranche would have qualified as STC securitisation. On the other hand, they call for:

  • a framework that takes into account the need to provide capital relief for significant risk transfer;
  • a principle-based approach, to allow for differences between jurisdictions, but common definitions of certain key terms;
  • eligibility of synthetic securitisations (but not synthetic resecuritisations) to STC treatment, or at least of those tranches retained by the originating bank, and of managed collateralised loan obligations (CLOs);
  • transitional relief for existing transactions, to avoid fire-sales when STC securitisations start benefitting from better capital treatment;
  • legal certainty as to what securitisations are determined STC. This could involve creating a web-based central register of qualifying securitisations; and
  • flexibility to calibrate disclosure requirements for private transactions.

(Source: Response to BCBS-IOSCO Consultation on Simple, Transparent, and Comparable Securitisations)