The complex structuring and multi-step distribution chains involved in certain securitisation structures in the run-up to the 2008 global financial crisis (GFC) generated misaligned incentives between the originator of a securitisation and its investors. This led to weakened lending standards, while amplifying a rapid and largely undetected build-up of leverage and maturity mismatches. A number of regulatory reforms have since been introduced to improve transparency, address conflicts of interest, strengthen the regulatory capital treatment for banks’ securitisation exposures by improving risk sensitivity and reducing cliff effects, and align incentives associated with securitisation.

The objectives of the evaluation are twofold:

  1. to assess the extent to which risk retention and higher bank prudential requirements implemented to date have achieved their financial stability objectives and

  2. to examine broader effects (positive or negative) of these reforms on the functioning and structure of the securitisation markets and on the financing of the real economy.

To achieve this, the evaluation examines the mechanisms through which these reforms are expected to operate and associated metrics to assess securitisation market resilience.

The analysis thus far suggests that the reforms have contributed to the resilience of the securitisation market without strong evidence of material negative side-effects on financing to the economy, though the findings are preliminary and need to be confirmed by additional work. Looking ahead, the FSB will continue its analysis of the effects of these reforms and expects to publish the final report at the end of 2024.

The FSB invites comments on this consultation report and the questions set out below. Responses should be submitted via this secure online form by 2 September 2024.

Responses should be submitted via this secure online form by 2 September 2024. For questions, please contact the FSB ([email protected]).