Originally published 12 March 2009
Keywords: Residential Mortage-Backed Securities, RMBS, Principles, Financial Stability Forum, IOSCO, European Economic Area, EEA,
The European Securitisation Forum has now published its Residential Mortgage-Backed Securities (RMBS) Issuer Principles for Transparency and Disclosure (the "Principles"), together with two data reporting templates for RMBS issuers to use in conjunction with the Principles. The Principles have been delivered to the European Commission in fulfilment of industry commitments to increase transparency and represent a response to the recommendations of the Financial Stability Forum and IOSCO.1
The Principles constitute a voluntary code of practice for European RMBS issuers to adopt in respect of RMBS reporting standards and formats, and are designed to improve transparency and assist investors and regulators active in the securitisation industry. They do this, for example, through standardising certain aspects of data reporting so as to aid investors and regulators when comparing products; and by encouraging access to the relevant RMBS information.
The Principles have been drafted to apply to all RMBS structures originated by European Economic Area (EEA)-based issuers - whether stand-alone or revolving structures and including master trusts - and have tailored provisions for prime and for non-conforming deals. They deal with (a) pre-issuance information, such as the availability and content of marketing materials, prospectuses and other offering documents and (b) post-issuance information in the form of ongoing investor reporting and other ad hoc information disclosure. The overriding principles are ones of comparability and disclosure to a level that will enable investors to make informed decisions.
Although compliance with the Principles is voluntary, a number of European issuers have endorsed the Principles, in respect of their programmes, to date. For these endorsing Issuers, their new issuance after 31 December 2009 will be expected to comply with the Principles and include a statement to that effect in the relevant prospectus.
The data templates comprise the ESF Prime RMBS Standardised Reporting Template and a new combined uniform Credit Rating Agency Reporting Template for UK Non-Conforming RMBS. Credit rating agencies have indicated that from 31 March 2009 they will start to use the new Credit Rating Agency Reporting Template for gathering information from issuers of new UK non-conforming RMBS transactions.
Mayer Brown advised the ESF on the formulation of the Principles.
The Principles are available at http://www.europeansecuritisation.com/dynamic.aspx?id=1672.
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Footnote
1. The relevant documents being the "Ten Industry Initiatives to Increase Transparency in the European Securitisation Markets", published 2 July 2008 (http://www.europeansecuritisation.com/Communications/Archive/Current/Joint%20release_transparency%20initiatives%202Jul08.pdf), the April 2008 Financial Stability Forum Report on Enhancing Market and Institutional Resilience and the May 2008 Report of the IOSCO Task Force on the Subprime Crisis.
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