The final report by the Financial Stability Board (FSB) on its evaluation of the effects of the G20 Financial Regulatory Reforms on Securitization was published on January 22, 2025. The report focuses on the International Organization of Securities Commissions (IOSCO) minimum retention recommendations and the Basel Committee on Banking Supervision (BCBS) revisions to prudential requirements for bank securitization-related exposures in the securitization markets and this client alert focuses on the report’s analysis and conclusions with respect to the collateralized loan obligation (CLO) market.
Its conclusions do not seem to be materially different from the preliminary findings in its July 2024 interim “consultation report,” which, broadly speaking, stated that its reforms – embodied in, among other places, the EU and UK securitization regulations – have been successful and not constrained the market, something that some market participants may partly disagree with.
The evaluation identifies issues for consideration by national authorities and international bodies, such as the need to monitor risks from recent market developments and the effectiveness of risk retention requirements for risk alignment in CLOs.
Learn more in this alert.