European Central Bank board member Yves Mersch said in a speech today at the IMN Global ABS conference that regulators must work in concert to break down the “regulatory and market barriers that are preventing the revitalization of European ABS markets.”

That collaboration is apparently not taking place. 

"There is still a sense that the regulatory agenda is proceeding in an uncoordinated manner," Mersch added.

The European Commission, the ECB, the Bank of England, the three European Supervisory Agencies, and the European Systemic Risk Board cover most of the EU ABS issues under discussion at the moment.

One example where the lack of coordination is evident is over the treatment of so-called 'high quality' ABS. The Basel Committee on Banking Supervision is looking to finalize the securitization capital framework before 2015 but does not consider ‘high quality’ preferential treatment. But in a few weeks the the European Commission is expected to identify which ABS are ‘high quality and liquid’ in the Liquidity Coverage Ratio.

Another example concerns transparency requirements across asset classes. Mersch said that whereas the ECB has made substantial progress on pan-European transparency and disclosure requirements for ABS — building on the central bank's loan-level data templates — regulators have scarcely advanced on transparency requirements for covered bonds.

“While so much effort is being devoted to improving transparency over an asset class where substantial progress has already been made, covered bonds continue to have no common transparency framework and indeed no common supervisory framework,” Mersch said. “Nonetheless, they benefit from preferential risk weights in the Capital Requirements Regulation – which, by the way, deviate from the Basel capital framework.”

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