SRTs to Benefit From Bank of England’s Plan to Ease Crisis Rule

UK regulators have proposed relaxing a rule put in place after the global financial crisis to reduce financial complexity, a move that could fuel the rise of significant risk transfers used by lenders to free up capital.

In the wake of the 2008 crisis, European regulators banned the resecuritization, or repackaging, of asset-backed securities in an effort to ensure that buyers and supervisors can easily assess risk. Now, the Bank of England is arguing that limited repackaging can be done safely while reducing the administrative burden on firms and investors.