08 August 2013

Clifford Chance: Developments in European regulation on securitisation – What's left in the pipeline?

Since the beginning of the global financial crisis, the securitisation market has seen a range of regulatory proposals aimed at curbing excessive risk taking. These proposed changes are numerous, complex and, in some cases, the unintended consequence of measures aimed at other areas of the financial markets. Perceptions of securitisation are changing – from being seen as part of the problem, to being recognised as part of the solution, as one of a range of possible routes to providing funding for the real economy. Although politicians and senior regulators understand the case for securitisation and its value in the current credit environment, “the technocrats working on the regulations are still drafting the detail in ways that can be problematic,” says Kevin Ingram, a partner in Clifford Chance’s Capital Markets practice.

First, the good news: regulators and policy-makers are more willing to see that securitisation has a positive role to play and there are fewer “securitisation is a problem” regulations proposed. However, other areas of regulation restarting to impact securitisation and these are not so well sign-posted but nonetheless could have significant, if sometimes unintended, consequences. As Kevin Ingram, a partner in Clifford Chance’s Capital Markets practice, concludes: “Although we’re coming to the end of the big bulk of new regulation there is still a lot of work to do, and we will undoubtedly be hit with side winds from other bits of regulation as well. So I think for the next few years market participants will need to be watchful, wary and well advised as they navigate this new environment”.

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