Reviving securitisation: regulators send mixed messages

Regulators are talking about reviving the securitisation market as a solution to European bank funding pressures – and the door has been opened to counting mortgage-backed debt as a liquid asset. But the market also faces regulatory headwinds. Mark Pengelly reports

Since mid-2007, when waves of structured finance downgrades marked the start of the crisis, securitised products have been battling stiff headwinds – many of them regulatory. So-called ‘skin in the game’ rules now force issuers to retain risk in new deals, capital requirements for banks and insurers are being cranked up, and regulators are closely scrutinising new transactions for signs of capital arbitrage.

Recently though, some supervisors have been singing from a different hymn sheet. Most