4 June 2019
The last year has seen an extraordinary level of change and turbulence in the securitisation markets. The biggest source of that change and turbulence was not – as many had feared – Brexit. While the political situation in the UK remains hugely changeable – and a disruptive, disorderly no-deal exit remains possible – the story of Brexit so far has been one of impending crisis where the worst outcomes have been averted at the last minute; and markets seem to be becoming inured to the political theatrics as a result.
The main source of change has, in fact, been the new EU Securitisation Regulation. Its introduction has caused a significant level of legal uncertainty, with basic questions remaining unclear despite the fact that the new regime has been in place for almost half a year. However, it is not all bad. Market participants are coming to grips with the new system, and part of the reason for the delay in the final, detailed rules is that there is genuine engagement by the authorities and a real will to get things right – even if it is taking longer than it ideally would. Remarkably, there has been significant issuance in the first half of 2019 despite all the uncertainty.
In this year’s publication we try to distil the lessons learned to date about the Securitisation Regulation regime. We identify areas of remaining uncertainty, some key issues market participants should be thinking about when developing their own approaches, and some solutions that are already beginning to emerge. We hope these reflections prove useful when planning how to go about moving into the market’s new architecture. As building works often do, the project is running behind schedule and over budget, but we are still hoping the market has a safe and solid new home when it is finally complete!