Richard Burgon – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Richard Burgon on 2016-06-15.

To ask Mr Chancellor of the Exchequer, what assessment his Department has made of the systemic financial risk from tranching of securitised assets.

Harriett Baldwin

The Government welcomed the development of international and EU standards to revitalise the regulatory framework for securitisation by encouraging the use of simpler and more transparent products. We agree with the Bank of England that a well-functioning and stable securitisation market will benefit financial stability and the wider economy. We support the Basel standards for securitisation, set with the intention of enhancing financial stability, which see features such as tranching and synthetic structures as being legitimate activity. We also support the need for all securitisations to adhere to appropriate rules on transparency and investor due diligence, and that they must be afforded sensibly calibrated capital requirements. Following the financial crisis it was Basel, working with the Financial Stability Board and the International Organization of Securities Commissions which, set the 5 percent risk retention standard.

In the development and delivery of policy, Treasury Ministers and officials are in regular contact with relevant institutions, regulatory authorities, other governments, industry and other civil society groups including think tanks such as Finance Watch.