Seven European securitization market associations, including the Commercial Mortgage Securities Association (CMSA) and European Securitization Forum (ESF), have issued a three pronged initiative aimed at improving transparency in the European ABS market. A letter sent to the European Union by the associations marks the first step toward addressing concerns that emerged from last October's Ecofin meeting held in Portugal. At Ecofin, European finance ministers put together a roadmap calling for, among other things, measures to improve transparency in these markets. The first part of the initiative will deal with Pillar 3 of the new Capital Requirements Directive (CRD). As provisions from Basel II are implemented across Europe through the CRD, the group of European securitization associations wants to make sure these standards are defined adequately, particularly in the area of securitization. The second part of the initiative is asking for more consolidated market reporting. While industry participants agree that there is ample information available on the market today, policy makers want to be able to access the available information through one platform. The securitization industry will also undertake the task of reviewing how to make information available that investors might want access to but for legal reasons may not be able to get it. At least part of the initiatives set forth is expected to be in working order by mid-June, as per the timeline set by Ecofin. Industry participants said its important to remain committed to solutions that will bring the market through one of the most challenging environments it has ever faced. "There is no date for when we expect things to get back to working order but essentially what we are waiting for is when investors will effectively start putting money to work," said Rick Watson, managing director and head of the ESF. Watson added that one thing investors have voiced their concerns about is the supply overhang in secondary market trading created by the forced sale of assets in certain SIVs. He did acknowledge, however, that it is still uncertain when trading would resume to normal.
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