The Global Environment for Securitization:
An International Regulatory Overview

Abstract

The panel moderator asked the speakers questions concerning global regulatory developments affecting the global securitization market since the 2008 financial crisis. Although senior policy makers are starting to realize the importance of securitization as a global product, an increasing disconnect is emerging among jurisdictions in terms of policy responses. The securitization market is very international. Inconsistency across regulations in different large securitization markets causes difficulties for issuers and investors. Rather than consistency, many regulators appear to be trying to achieve “equivalency.” Regulators are trying to differentiate between high-quality and other securitizations. There are still elements of “punishment” that are coming through in regulation, such as limits on the types of assets that should be included in a bank’s liquidity coverage ratio. Other near-term challenges include the risk retention rule and the Volcker Rule. The second round of the Basel proposals took a lot of positive steps from the first consultative paper, but the new proposal still comes with a bias that securitization needs to have more capital.