International Organization of Securities Commissions (IOSCO) is an international organization that sets standards for securities regulation. IOSCO has developed a number of recommendations for securitisation, including:
- Recommendation C-18 on Disclosure for Structured Finance Products: This recommendation sets out requirements for disclosure of information about structured finance products, including securitisations.
- Recommendation C-19 on Credit Risk Transfer: This recommendation sets out requirements for credit risk transfer, which is a key component of securitisation.
- Recommendation C-20 on Operational Risk Management for Financial Institutions: This recommendation sets out requirements for operational risk management, which is important for securitisation.
IOSCO's recommendations are not legally binding, but they are widely adopted by securities regulators around the world. This helps to ensure that securitisations are regulated in a consistent manner and that investors are protected.
Here are some of the applications of IOSCO's recommendations in securitisation:
- To help investors make informed investment decisions: IOSCO's recommendations on disclosure help investors to understand the risks associated with securitisations.
- To reduce the risk of systemic risk: IOSCO's recommendations on credit risk transfer and operational risk management help to reduce the risk of systemic risk, which is the risk that a failure of one financial institution could cause a chain reaction of failures.
- To promote international cooperation: IOSCO's recommendations help to promote international cooperation in the regulation of securitisation. This is important because securitisations are often cross-border transactions.
IOSCO's recommendations are a valuable resource for securities regulators, market participants, and investors. They help to ensure that securitisations are regulated in a consistent manner and that investors are protected.