The risks from industry inaction regarding EMIR are "grave" and could have "serious negative consequences" on the European securitisation sector, according to Bank of America Merrill Lynch European securitisation analysts. Along with a recent ISDA whitepaper, they outline recommendations to limit the regulation's detrimental effect on the market.
The BAML analysts say that major negative consequences will result from the EMIR proposal for securitisation special purpose entities (SSPEs) to be re-classified from 'non-financial counterparties minus' (NFC-) to 'financial counterparties' (FC), which must clear and post margin for derivatives agreements.
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