ESF Releases RMBS Issuer Principles For Transparency And Disclosure

The European Securitisation Forum (ESF), an affiliate of the Securities Industry and Financial Markets Association (SIFMA), has released the “RMBS Issuer Principles for Transparency and Disclosure” (the Principles), a set of voluntary guidelines for issuers of European residential mortgage-backed securities (RMBS). The Principles are an important component of the industry’s initiatives to increase transparency in the securitisation market as recommended by ECOFIN, European Commission, Financial Stability Forum, IOSCO and other bodies.

The Principles will apply to disclosure of information by issuers to investors and other market participants both (a) pre-issuance, and (b) post-issuance, on a regular reporting/ongoing basis. The Principles will establish a standard of consistency, transparency and data accessibility to be expected by investors, and will enhance comparability of reporting across Europe. These are part of a coordinated global effort together with the American Securitization Forum’s Project RESTART.

"The securitisation industry understands the need for change and consistency of reporting. We are pleased that a number of issuers have already agreed to publicly endorse the Principles, and that many others are considering endorsement," said Mark Hickey, chairman of the ESF.

“The European securitisation industry has delivered on its commitment to improving information available to investors in securitised products, and these Principles embody that goal,” said Rick Watson, managing director and head of the ESF.

“Our overall goal is to help restore confidence in European securitisation by demonstrating that the industry is actively improving disclosure standards,” said Marco Angheben, director of the ESF.

Version 1.0 of the Principles encompasses all RMBS secured by prime and non-conforming mortgage loans originated by European Economic Area-based issuers, whether issued under stand-alone or revolving structures, including master trusts. The Principles are living documents that will evolve to reflect market developments. It is expected that further improvements will be added in 2009. The Principles have been developed through active consultation with RMBS issuers and other market participants including investors from the UK, the Netherlands, Spain and Italy. These jurisdictions represent the largest European RMBS markets in terms of issuance volumes.

The Principles recommend that issuers comply with the reporting of a required high percentage of industry-agreed data fields by the end of 2009 to allow issuers sufficient time to complete required information systems changes. The Principles propose a new combined uniform Credit Rating Agency Reporting Template for the minimum information to be provided by issuers to credit rating agencies in respect of UK Non-Conforming RMBS. The credit rating agencies have indicated that they will start to include the template in their information gathering processes for new UK non-conforming RMBS transactions closing as from 31 March 2009.

Issuers in the four jurisdictions are in various stages of evaluating and implementing the new Principles. For example, in certain jurisdictions the industry is actively discussing the reporting format with relevant regulatory authorities which will affect timing.

The industry is pleased that many RMBS issuers are in a position to already endorse at this time their commitment to comply with the Principles, as described on the ESF website for the RMBS programmes listed below:

The Principles are available on the ESF website at www.europeansecuritisation.com.