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According to the preamble, the European Credit Rating Agency Regulation ((EC) No 1060/2009) is intended to mitigate possible conflicts of interest and ensure high quality and sufficient transparency of ratings and the rating process.  The Council of Europe has recently published what may be the final form of the second amendment to the rating agency regulation commonly known as CRA III with confirmation that it will assent to the amending regulation becoming effective if the European Parliament passes it at its first reading.  This has been awaited with great trepidation by the structured finance industry.  There are at least three areas of special concern in CRA III: rating agency rotation, public disclosure and civil liability of rating agencies:-
Continue Reading CRA III in final form? Should we be very afraid or just afraid?

Quite apart from its economic merits, the attractiveness of ABS for investors has become something of a hostage to financial regulation.  On 26 September 2012, Jonathan Faull,  director-general, Internal Market and Services at the European Commission wrote to Gabriel Bernardino of EIOPA (the European insurance regulator) suggesting that capital requirements under Solvency II for “long-term investment”, such as investment in infrastructure projects, could be reduced, including where such investment is made in the form of securitisation.  It has been reported that the ECB is promoting the idea that certain ABS be eligible for inclusion in the liquidity buffer under Basel III. Both of these changes could greatly increase the liquidity and hence the attractiveness of certain types of asset-backed security. 
Continue Reading Are regulators waking up to the need to encourage securitisation?