High-quality securitization in the European markets : analysis on the form and effectiveness of EUSR and STS framework

Abstract

The purpose of this bachelor’s thesis is to analyse how effective have post 2017 regulatory changes been in improving transparency and reducing risk in the asset-backed securities market in Europe. The main focus of this thesis is to conduct an analysis on the effectiveness of the European Regulation 2017/2402, which was presented in 2017 and applied for all new issues from 2019 onward, 11 years after the devastating financial crisis of 2008. These regulations are also referred to simply as the Securitisation Regulation which importantly introduced the principles of simple, transparent and standardized (hereafter shortened to STS) framework for future compliant securitization instruments as well as the mandatory EUSR framework affecting all post 2019 securitizations. The goal of this thesis paper is to analyse how effective the EUSR and STS regulatory frameworks have been in making securitization a safer instrument overall through structural changes and if they have been able to revive the European securitization markets. I also bring readers up to speed on what securitization is and what are the key concepts of this complex financial instrument as well as what are the key enhanced features these new regulatory frameworks have brough to the industry. This thesis will be conducted in a manner fitting a conceptual analysis study as its main research method, whereby researching prior studies, official documents and data gathered for securitizations in the European markets will conclusions be gathered. This thesis paper will give a comprehensive understanding to the reader about the main components of securitization and the European Regulation 2017/2402 as well as how the new enhanced securitization features have affected European securitizations.