Oct 13, 2011
Danielle Myles, International Financial
Law Review (www.iflr.com)
regulators’ proposal for stricter securitisation standards similar to the U.S.
could close parts of the private market, industry participants have warned.
protectionist reforms outlined in the national instrument, proposed by the
Canadian Securities Administrators (CSA) earlier this year, include enhanced
reporting and disclosure standards, and narrower authorised investor classes.
large majority of private placements of long-term securitised products are
heavily negotiated deals between sophisticated parties,” said Rick Fullerton,
a banking and finance partner with Osler, Hoskin & Harcourt. “The additional
cost and time delays that will be imposed by these requirements are not
warranted in these circumstances,” he added.
fundamental problem with the proposal is its concern with the
originate-to-distribute model. While protectionism in this area is considered
worthy, Canada has not seen the esoteric structures like those used in US
that issue securitised products in Canada have never been
originate-to-distribute issuers; they do ultimately end up with some ‘skin in
the game’,” Fullerton said.
participants consider the CSA’s move as a disproportionate and misguided
response to the collapse of the country’s $30 billion asset-backed commercial
paper (ABCP) market at the onset of the financial crisis in August 2007.… “They
seem to be targeting events of the past as opposed to the current state of the
securitisation market. They are trying to protect investors from something that
is unlikely to occur again in the Canadian securitisation market,” Fullerton