Draft ICI Global Letter to BCBS/IOSCO on Simple, Transparent and Comparable Securitisations - Member Comments Requested by January 26
[28674]
January 15, 2015
TO:
FIXED-INCOME ADVISORY COMMITTEE No. 2-15
ICI GLOBAL REGULATED FUNDS COMMITTEE No. 1-15
INTERNATIONAL COMMITTEE No. 3-15
INVESTMENT ADVISERS COMMITTEE No. 1-15
MONEY MARKET FUNDS ADVISORY COMMITTEE No. 3-15
MUNICIPAL SECURITIES ADVISORY COMMITTEE No. 1-15
SEC RULES COMMITTEE No. 2-15
RE:
DRAFT ICI GLOBAL LETTER TO BCBS/IOSCO ON SIMPLE, TRANSPARENT AND COMPARABLE SECURITISATIONS - MEMBER COMMENTS REQUESTED BY JANUARY 26
The Basel Committee on Banking Supervision (“BCBS”) and the International Organization of Securities Commissions (“IOSCO”) recently issued a consultation regarding criteria for identifying simple, transparent and comparable securitisations (the “Consultation”). [*] ICI Global has written a comment letter in response to the Consultation, a draft of which is attached, and is summarized briefly below. If you have comments on the draft letter, please provide them in writing to Sarah Bessin at sarah.bessin@ici.org by Monday, January 26, 2015.
Summary of Letter
Last year, BCBS and IOSCO established a joint Task Force on Securitisation Markets, which was charged with identifying the factors that may be hindering the development of sustainable securitisation markets and developing criteria to identify and assist in the financial industry’s development of simple and transparent securitization structures. Building on this work, BCBS and IOSCO have identified 14 non-exhaustive and non-binding criteria for simple, transparent and comparable (“STC”) securitisations to provide a basis for the industry and the regulatory community to identify certain features of securitisations that may lend themselves to less complex analysis and therefore could contribute to building sustainable securitisation markets.
ICI Global states in the draft comment letter that that BCBS’ and IOSCO’s development of criteria for STC securitisations can serve as an important international framework to support this effort at a high level. We believe it is critical, however, that the criteria be broad enough to reflect differences in legal requirements and practices relating to asset-backed securities (“ABS”) across, and within, jurisdictions, as well as allow for the significant variability among ABS asset classes. The letter therefore recommends that BCBS and IOSCO: (i) adopt STC criteria that are more “principle-based” and less detailed than the criteria proposed in the Consultation; and (ii) not adopt separate STC criteria for asset-backed commercial paper and other short-term securitisations.
The draft letter also states that ICI Global supports the development of standards that would enhance the quality and transparency of ABS disclosure, and promote comparability among ABS offerings. The letter explains that, while we understand BCBS’ and IOSCO’s reasons for also including simplicity among the proposed STC criteria, we believe this standard should be utilized cautiously. Securitisations, by their structure, contain a measure of complexity, and it would be unfortunate if the STC criteria were applied in a manner that suggested that securitisations that do not meet the STC criteria should be avoided.
Sarah A. Bessin
Senior Counsel
endnotes
[*] Basel Committee on Banking Supervision and Board of the International Organization of Securities Commissions, Consultative Document, Criteria for identifying simple, transparent and comparable securitisations (Dec. 2014), available at http://www.iosco.org/library/pubdocs/pdf/IOSCOPD467.pdf. Comments on the consultation are due on February 13, 2015.