The responses revealed a strong support from market participants, mainly because of its potential contribution to increasing transparency, which is seen as an essential ingredient for more informed risk assessments and to restore weakened confidence in ABS markets. In addition, respondents  4  BIS Review 84/2010  issued a number of recommendations to the Eurosystem regarding specific implementation aspects that should contribute to a smoother introduction of the loan by loan level data. From a timing perspective, the Governing Council of the ECB will assess during the autumn the results of the final technical preparatory phase that has already started, also taking into account the recommendations put forward during the public consultation, before deciding whether to proceed with the final phase of the introduction of ABS loan by loan data requirements. This decision is envisaged to take place during the fall 2010. In case it is decided to proceed, a twelve-month phasing-in period – in line with the feedback received in the public consultation – would be sufficient for originators and issuers to adapt their systems to provide the required data. It should be noted that the Eurosystem’s initiative on loan level data is in line with certain amendments introduced by the Second Capital Requirements Directive (“CRD II”) that will enter into effect on 1 January 2011. Amongst other things, CRD II provides that the sponsor or the originator must ensure that investors and prospective investors have readily available access to all materially relevant data on credit quality and performance of the individual underlying exposures.

I would like to elaborate on the Eurosystem’s contribution to enhanced disclosure through its initiative to make loan-by-loan level data on ABS transactions widely available. Let me say from the start that this initiative alone will not suffice to re-open the market, but it would become an important building block along the path towards standardisation, simpler structures, and better post trade price transparency. As you will remember, in December 2009 the ECB launched a public consultation in order to gather market and public feedback on a proposal to introduce requirements on loan level data in ABS transactions and make this an explicit eligibility criterion, should the ABS be used as collateral with the Eurosystem. This initiative may trigger a structural change in the way the different market participants interact within the securitisation markets. By increasing the transparency, availability and quality of the information on the underlying assets, and by ensuring a regular updating of the information, market participants will have a sounder base on which to build valuation, risk and surveillance models. The public consultation included six questions on the general advisability of the initiative as well as on technical details of the implementation. At the end of the consultation period on 26 February 2010, 53 responses from different investors, market data vendors, credit rating agencies, financial service providers, audit firms, stock exchanges, law firms, public authorities, and central securities depositaries, had been received.