By Amélie Labbé
The Basel Committee’s updated criteria to
identify simple, transparent and comparable (STC)
securitisations has brought welcome elements in line with
European Commission (EC) standards. But the global body has
placed the burden of certifying STC compliance with investors,
which could lead to confusion.
The updated rules, released by the Basel Committee on
Banking Supervision (BCBS) on July 11 have reduced the risk
weight floor for senior exposures from 15% to 10% - the same as
the EC’s standard for simple, transparent and
standardised (STS) securitisation.
They also place the assessment of STC compliance on
investors – making sure the information provided by
the issuer on the underlying asset is transparent, detailed
enough, and that risks and returns have been correctly
Some believe that this could create some initial confusion
in the application of the more formalised framework, especially
as STC compliance has to be...