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26th November, 2012:
The financial melt-down of 2007 resulted in the degradation of the financial sector world wide and left it in a decomposed state. The state of the European market was no different. It was felt that an efficient securitisation market is of utmost importance for bailing out the Dutch mortgage debt market and for the revival of the Dutch housing market. With a view of achieving these objectives, the Dutch investors and issuers joined hands together to form the Dutch Securitisation Association (DSA).
The first initiative to form the DSA was taken back in 2010. After two years of rigorous hard work by the issuers, investors and other stakeholders, to ensure the development of a much transparent and less complicated system for the Dutch securitisation transactions; the Holland Financial Centre[1] (HFC) finally announced the formation of the DSA on November 19, 2012[2]. The main objective with which the DSA was formed was to standardize the information available in the Dutch RMBS market. The HFC wanted to set higher standards for the Dutch transactions as compared to the standards applicable to the European Prime Collateralized Securities (PCS) which were announced last week.
The primary concern of the DSA will be to restore the confidence of the investors in the Dutch securitisation market products by offering much more transparency and authenticated information regarding the transactions to the potential-investors, regulators and rating agencies. Voluntary guidelines for Dutch securitisation transactions have been introduced which are directed towards better documentation and investor reporting. In addition to this, a website (www.dutchsecuritisation.nl) will be launched which will contain all the relevant details of the securitisation transactions undertaken. The Dutch issuers will provide their information to the European Data-Warehouse (the ECB-endorsed project to capture loan-level data for ECB-eligible securitisations) and will also provide it for free on the DSA website. The DSA has been granted “permanent observer” status within PCS. To get PCS certification, Dutch RMBS issuers will be required to declare in their prospectus that whether they have complied with the DSA guidelines or not. Though this is not a necessary PCS eligibility norm, but disclosures regarding compliance must be stated explicitly and accordingly.
Availability of authentic information will be easier with proper documentations and in a much less complex manner. The proper compliance and success of the DSA voluntary guidelines is still news of the future.[i]
[2]http://www.hollandfinancialcenter.com/publications//20%20nov%20press%20Release%20DSA%20Announcement.pdf
[i] Our comprehensive page on Netherlands:
http://vinodkothari.com/nether.htm
[Reported by: Piyush Sinha]