Securitisation: has the financial crisis ‘bad boy’ been tamed?

Some ten years ago, millions of ‘toxic’ housing loans that had been churned into Mortgage-Backed Securities and Collateralised Debt Obligations began to falter and spread contagion from the United States to financial markets around the globe. Levels of securitisation plummeted after the crisis. But, as appetite returns, the European Union has sought to strengthen regulation of these instruments with a uniform framework for ‘simple, transparent and standardised’ transactions. Adam Samuel ventures where all but quants fear to tread.

Adam SamuelBA LLM DipPFS MCISI FCIArb Certs CII (MP&ER) Barrister and Attorney may be contacted atadamsamuel@aol.com.For links to where you can buy the second edition of ‘Consumer Financial Services Complaints and Compensation’, see www.adamsamuel.com/book.

It is relatively rare that completely unreadable legislation appears on a subject that is critical to the future of financial institutions around the world and their ordinary customers. The EU Securitisation Regulation meets this description with flying colours. Due to enter into force on 1 January 2019, it comes with an amendment to the Capital Requirements Regulation (CRR), contained in a sister Regulation. Needless to say the European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) have been working on technical standards to enable the two regulations to work.