03 September 2015

IOSCO publishes review of Implementation of Incentive Alignment Recommendations for Securitisation

The report responds to a request from the G20 Leaders in September 2013 for IOSCO to conduct a peer review on the implementation of incentive alignment regimes, including risk retention requirements. IOSCO published the Incentive Alignment Recommendations in November 2012, as part of its final report on Global Developments in Securitisation Regulations.

The report covers the three Incentive Alignment Recommendations in the 2012 report, which call for national authorities to:

·         evaluate incentives across the securitisation value chain, formulate and implement approaches to incentive alignment (Recommendation 1);

·         set out the elements of the incentive alignment approach, including risk retention (Recommendation 2); and

·         seek to minimise the potentially adverse effects to cross-border securitisation transactions resulting from differences in approaches to incentive alignment and risk retention (Recommendation 3).

The Review reports progress in implementation as of 30 April 2015 (the reporting date). It does not assess the consistency of implementation measures against the recommendations in the 2012 IOSCO Report. The Review found that participating jurisdictions have made significant but mixed progress in implementing the Incentive Alignment Recommendations. The Review reported progress only on implementation of Recommendations 1 and 2. A review of implementation of Recommendation 3 was considered premature. As of the reporting date, many jurisdictions were still in the process of implementing the recommendations or had not yet begun.

Of the 25 respondents, only five reported having completed implementation of all measures to implement Incentive Alignment Recommendations covered by this report in respect of the whole securitisation market.

Full press release

Full report

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