Copying and distributing are prohibited without permission of the publisher.

Watermark

Q&A: Ben Bates, CEO of EuroABS, chats transparency and the ECB

By Will Caiger-Smith
10 Jun 2014

After the European Central Bank and the Bank of England’s joint paper called for more transparency in securitization, and the ECB last week said that it will look into making outright purchases of “simple and transparent” ABS, data provision is a big topic at this year’s Global ABS conference. GlobalCapital caught up with Ben Bates, CEO of EuroABS, to discuss transparency.

After the European Central Bank and the Bank of England’s joint paper called for more transparency in securitization, and the ECB last week said that it will look into making outright purchases of “simple and transparent” ABS, data provision is a big topic at this year’s Global ABS conference. GlobalCapital caught up with Ben Bates, CEO of EuroABS, to discuss transparency.

GlobalCapital: How are the ECB and BoE paper, which mentioned transparency in the securitization market, and the ECB’s announcement last week about potential outright purchases of ABS going to affect the market?

Ben Bates, CEO, EuroABS: It has to be positive. The response I've seen has been a bit lukewarm and I'm not sure why. Talk is fairly cheap, but at least [the ECB] is saying it will be buying. You can talk the talk but [Draghi] is now walking the walk and that has to be positive.

One of the most important things about that document is that they [regulators] are actually talking and they are co-operating. That's one of the main things people have been saying for years – go ahead and regulate, but for god's sake, talk.

GlobalCapital: Since you started collating your EADReD database of prospectuses and investor reports in 1995, what changes have you seen in the quality of the data? Is it worse? Better?

Bates: It's easy for me to say, but I never saw a big difference between the ECB and Bank of England templates anyway. So I don't think that it was necessarily that huge a deal, but obviously the convergence of that is welcome. In terms of compliance, the data quality is quite variable, but it is definitely getting better. Some of the data has been superb, some patchy, some have adjusted it and improved it along the way and that makes continuity an issue.

GlobalCapital: Are there any regions that stand out in terms of the quality of data provided?

Bates: Obviously answer is the UK RMBS stuff, as the poster child for the Bank of England. One reason for that is that there have been bad times for other issuers, or little issuance from other [sectors]. For example, there have been no UK public CLOs or CDOs. There have been a few auto transactions, but the main thing is RMBS.

GlobalCapital: It seems like the ECB is making all the right noises to push securitization towards becoming more like other, more transparent debt markets, like FIG bonds, for example. Is this a feasible proposition, and what are the obstacles?

Bates: Regulators have to put their ideas down on paper and issue consultation documents. At the end of the day you have to start somewhere. There are issues with commercial concerns around releasing this data, because many issuers say we cannot allow competitors to see that data – that it would put them out of business. That's one of the problems.

There is some stuff with CRA III where perhaps issuers are complaining about data disclosure, but some of those discussions were happening a few years ago. That ship sailed several years ago, and if there are issues remaining they need to be hashed out. It's give and take and compromise.

By Will Caiger-Smith
10 Jun 2014