FSB evaluating securitisation reforms

Published: 31 August 2023

On 30 August, the Financial Stability Board (FSB) published a Summary Terms of Reference detailing the objectives, scope and process of an evaluation on the effects of the G20 post-2008 securitisation reforms. Additionally, the FSB invited stakeholders to provide feedback on the following issues:

  • The extent to which securitisation reforms are achieving their intended objectives, especially the reduction of systemic and moral hazard risks;
  • Specific securitisation reforms (e.g. changes in bank prudential frameworks, risk retention requirements) which have had the greatest impact on originators, sponsors and investors;
  • The broader effects of these reforms on the functioning and structure of the securitisation markets as well as on financing to the real economy.

The overall evaluation aims to:

  • Assess the extent to which the G20 reforms on securitisation implemented to date have achieved their financial stability objectives.  Specifically, the evaluation will assess whether the reforms have addressed misaligned incentives that weakened lending standards in the credit origination process, as well as opaque and complex structures that prevented proper due diligence and led to the mispricing of risks by investors.
  • Examine broader effects (positive or negative) of the reforms on the functioning and structure of the securitisation markets and the implications for financing to the real economy.  This type of analysis will help identify any material unintended consequences that may have to be addressed, without compromising on the objectives of the reforms.

The FSB will incorporate feedback from stakeholders into a note with preliminary findings, which will be issued for public consultation in early 2024.  The final evaluation report will be published around mid-2024.

Comments can be submitted until 22 September 2023.  Please contact Guillermo Pérez Molina if you have any questions.