The European Securitization Forum (ESF) released the RMBS Issuer Principles for Transparency and Disclosure last week.
This set of voluntary guidelines for issuers of European RMBS is an integral part of the industry's initiatives to increase transparency in the securitization market as recommended by the ECOFIN, the European Commission, the Financial Stability Forum, the IOSCO and other bodies.
The principles will apply to disclosure of information by issuers to investors and other market participants both pre-issuance and post-issuance on a regular reporting/ongoing basis. They will establish a standard of consistency, transparency and data accessibility to for investors, and will enhance comparability of reporting across Europe.
These are part of a coordinated global effort together with the American Securitization Forum's Project RESTART.
"The securitization industry understands the need for change and consistency of reporting," said Mark Hickey, chairman of the ESF. "We are pleased that a number of issuers have already agreed to publicly endorse the Principles, and that many others are considering endorsement."
Version 1.0 of the principles covers all RMBS secured by prime and nonconforming mortgage loans originated by European economic area-based issuers, issued under stand-alone or revolving structures, including master trusts. The new standards are living documents that will evolve to reflect market developments. Further improvements are expected in 2009. The principles have been developed through active consultation with RMBS issuers and other market participants, including investors from the U.K., the Netherlands, Spain and Italy. These jurisdictions represent the largest European RMBS markets in terms of issuance volumes.
The standard recommended that issuers comply with the reporting of a required high percentage of industry-agreed data fields by the end of 2009 to allow issuers sufficient time to complete required information systems changes. The principles propose a new combined uniform Credit Rating Agency Reporting Template for the minimum information to be provided by issuers to credit rating agencies in respect of U.K. non-conforming RMBS. The credit rating agencies have indicated that they will start to include the template in their information gathering processes for new U.K. nonconforming RMBS transactions closing as from March 31.
Issuers in the four jurisdictions are in various stages of evaluating and implementing the new principles. For example, in certain jurisdictions the industry is actively discussing the reporting format with relevant regulatory authorities which will affect timing.
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