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Trade Group Targets Securitization Law

The European Securitisation Forum has established a taskforce to address an Italian law that covers securitization, in a move that could lead to the rise of new asset classes.

The European Securitisation Forum has established a taskforce to address an Italian law that covers securitization, in a move that could lead to the rise of new asset classes. Scott Rankin, London-based executive director of the ESF, says the trade group plans to address the legislation, known as law 130, in the hopes of tweaking and revising elements of it. Twenty two Italian firms have joined the taskforce, which plans to hold its first meeting later this month in Rome.

The ESF is forming the group now to enact change to the law, which is seen as too narrow by securitization market participants. However, the committee's formation is unrelated to the recent legal concerns about the bankruptcy protections afforded to securitizations of Italian lease transactions.

Rankin says it is premature to discuss specific issues the taskforce will address before its inaugural meeting. However, one Italian securitization lawyer says there is room to broaden the law's scope and make improvements. For example, the law does not provide a legal framework that would allow a future flow securitization to be sold, which is one area where it could be broadened and eventually lead to the development of new asset classes. Whole business, commercial-mortgage backed and residential-mortgage backed securitizations are among the types of deals that have packaged Italian assets since the law's enactment in 1999.

The taskforce is also noteworthy for the ESF because it is one of the first country-specific initiatives the trade group is pursuing. The group also recently enlarged a committee that was initially formed to deal with Basel II ramifications and now plans to broaden its scope to address the development of the synthetic securitization market, particularly in France and Italy.

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