Ahead of Basel III, Regulators Review Securitization

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The Basel committee said in an Oct.1 review of implementation standard for Europe, the U.S. and Japan that it had identified "gaps" in the U.S. and European Union draft implementing measures for Basel III standards.

Ron D'Vari, CEO and co-founder of NewOak Capital, said in a press release today that the Basel Committee review will likely lead not only to greater capital requirements but increased disclosure and transparency requirements as well. These are likely to impact liquidity requirements. 

"Securitization in Europe is about to get tougher, just as other financial regulatory requirements are getting tighter," D'Vari said.

The review will also make European securitization regulatory rules less certain and negatively affect consumer and commercial credit availability.

"The timing will be unfortunate as European Union badly needs to stimulate the economy and not constrain it further," he said. "Some of the weaker capitalized banks were counting on securitization as a possible way to deliver their balance sheet."  

Australia Tightens Regulations

The Reserve Bank of Australia said today in a press release that it is introducing new criteria for eligibility of RMBS in its operations.

RMBS issuers will be required to provide more detailed information than is currently the case. The new information, which will have to be kept up to date, covers both transaction-related data as well as information on the underlying assets.

"Currently, the information required by the Reserve Bank for RMBS to be eligible for repurchase agreement (repo) is largely about the core attributes of the security," the Reserve Bank said in a press statement today.

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