ESF Introduces Principles To Increase Transparency Within European Securitisation Industry

The European Securitisation Forum (ESF), an affiliate of the Securities Industry and Financial Markets Association (SIFMA), has released the RMBS Issuer Principles for Transparency and Disclosure (the Principles). The Principles provide a set of voluntary guidelines for issuers of European

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The European Securitisation Forum (ESF), an affiliate of the Securities Industry and Financial Markets Association (SIFMA), has released the RMBS Issuer Principles for Transparency and Disclosure (the Principles).

The Principles provide a set of voluntary guidelines for issuers of European residential mortgage-backed securities (RMBS). The Principles are an important component of the industrys initiatives to increase transparency in the securitisation market as recommended by ECOFIN, European Commission, Financial Stability Forum, IOSCO and other bodies.

The Principles will apply to disclosure of information by issuers to investors and other market participants both (a) pre-issuance, and (b) post-issuance, on a regular reporting/ongoing basis. The Principles will establish a standard of consistency, transparency and data accessibility to be expected by investors, and will enhance comparability of reporting across Europe.

These are part of a coordinated global effort together with the American Securitization Forums Project RESTART.

The Principles recommend that issuers comply with the reporting of a required high percentage of industry-agreed data fields by the end of 2009 to allow issuers sufficient time to complete required information systems changes.

The Principles propose a new combined uniform Credit Rating Agency Reporting Template for the minimum information to be provided by issuers to credit rating agencies in respect of UK Non-Conforming RMBS.

The credit rating agencies have indicated that they will start to include the template in their information gathering processes for new UK non-conforming RMBS transactions closing as from 31 March 2009.

“The securitisation industry understands the need for change and consistency of reporting,” says Mark Hickey, chairman of the ESF. “We are pleased that a number of issuers have already agreed to publicly endorse the Principles, and that many others are considering endorsement.”

The European securitisation industry has delivered on its commitment to improving information available to investors in securitised products, and these Principles embody that goal, says Rick Watson, managing director and head of the ESF.

Our overall goal is to help restore confidence in European securitisation by demonstrating that the industry is actively improving disclosure standards, says Marco Angheben, director of the ESF.

The Principles are available on ESF website.

L.D.

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