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18 March 2013

GFMA response to the Consultative Document on Revisions to the Basel Securitisation Framework

GFMA believes that the envisioned framework would be much more conservative than prudence requires, would have less risk sensitivity than the current framework, would generate inconsistent results across different approaches, and would include cliff effects that could lead to adverse incentives.

It would be likely to hamper rather than encourage the redevelopment of a healthy securitisation market, with adverse consequences for economic growth and financial stability. The proposed modifications would temper some unduly conservative provisions, add risk sensitivity and produce more appropriate capital requirements better aligned with the credit profiles of the underlying assets and to capital requirements for other types of exposures. With these changes, the framework would better serve its prudential goals.

The time given to analyse and comment on these complex proposals was severely restricted. GFMA urges the Committee to consider carefully the results of the QIS and other empirical data. The Committee should then issue a complete set of proposed rules with ample time for consultation and comment before adopting a revised framework.

Full response


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