Assessing the Effectiveness of Global Regulations

Abstract

The moderator at this June 2013 Global ABS conference panel asked questions and panel members responded on regulators’ objectives and market reaction to the Basel Committee on Banking Supervision December 2012 Consultative Document on risk-based capital for securitization. The panelists’ responses covered the regulators’ proposed modified supervisory approach, simplified supervisory formula approach, internal assessment approach, and ratingsbased approach to the determination of regulatory capital for securitization exposures; the alternative arbitrage-free approach proposed by a group of banks; capital charges for structured assets under Solvency II; perceived problems with the Basel III liquidity coverage ratio; and current credit rating agency developments relevant to securitization, including information posting requirements of issuers under Rule 17g-5 and the boards for rating agency selection under the proposed Franken Amendment; and reflections on how the plethora of regulations from different countries fit together in practice.