The International Organization of Securities Commissions (IOSCO) has published a consultation paper that examines the evolution of securitization regulation.
The report, which is based on a survey of its various jurisdictions, examines the differing regulatory approaches; and makes policy recommendations addressing issues such as: risk retention; improving transparency; and, measures to standardize disclosure.
Its recommendations include, monitoring the industry experience with differing approaches to risk retention in the United States and Europe, which it fears may have significant cost implications, and may impede cross border issuance; consulting with investors about their appetite for stress testing information, and, possibly providing guidance on the disclosure issuers should be expected to make about stress testing; and, encouraging the industry to develop best practices to ensure consistent and harmonized approaches to disclosure.
The paper represents IOSCO’s response to a request from the Financial Stability Board to examine securitization regulation as part of its work to strengthen oversight and regulation of the shadow banking system.
Greg Medcraft, co-chair of IOSCO’s Task Force on Unregulated Markets and Products and chairman of the Australian Securities and Investments Commission, noted that the paper, “focuses on the importance of securitization as a market-based source of finance and the role cross border issuances play in deepening markets and supporting growth in the real economy.”
Task force co-chair and managing director of the Autorité des Marchés Financiers, Edouard Vieillefond, added that the paper, “provides us with an opportunity to work toward greater harmonization in our approach to regulation of this important sector. We look forward to receiving industry views on the measures we propose.”
Comments on the paper are due by August 6.