UNCITRAL Colloquium · PDF fileFourth International Colloquium on Secured Transactions Outline...
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1 Secured Transactions Law and Capital Requirements Enhancing Access to Credit and Financial Stability Giuliano G. Castellano, PhD, PhD Assistant Professor, Warwick Law School Research Associate, Ecole Polytechnique (Paris, i3-CRG) 15-17 March 2017 Vienna UNCITRAL Fourth International Colloquium on Secured Transactions Outline I. Objectives, scopes and approaches – Secured Transactions Law Reforms (UNCITRAL Model Law) – International Capital Requirements (Basel Accords) II. The regulatory treatment of collateral – Collateral as eligible credit protection – Dissonances with modern secured transactions law III. Coordination mechanisms – International, national, and firm-level – Building legal capacity at the national level Dr Giuliano G. Castellano 2
Transcript of UNCITRAL Colloquium · PDF fileFourth International Colloquium on Secured Transactions Outline...
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SecuredTransactionsLawandCapitalRequirementsEnhancingAccesstoCreditandFinancialStability
GiulianoG.Castellano,PhD,PhDAssistantProfessor,WarwickLawSchool
ResearchAssociate,Ecole Polytechnique (Paris,i3-CRG)
15-17March2017Vienna
UNCITRAL
FourthInternationalColloquiumonSecuredTransactions
OutlineI. Objectives,scopesandapproaches– SecuredTransactionsLawReforms(UNCITRALModelLaw)– InternationalCapitalRequirements(BaselAccords)
II. Theregulatorytreatmentofcollateral– Collateralaseligiblecreditprotection– Dissonanceswithmodernsecuredtransactionslaw
III. Coordinationmechanisms– International,national,andfirm-level– Buildinglegalcapacityatthenationallevel
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I.OBJECTIVES,SCOPESANDAPPROACHES
SecuredTransactionsLawReformsandInternationalCapitalRequirements
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SecuredTransactionsLaw- UNCITRALModelLaw-
Accesstocredit
CapitalRequirements- BaselAccords-
Financialstability
Concerninganyindividualorentity
LegalcertaintyTransparencyRightsandobligationsthroughconsensualarrangements
Concerningonlyregulatedcreditinstitutions(banks)
SoundnessofbanksandthebankingsystemRisk-basedapproachRegulatingbanksfrom‘within’
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TheBaselFrameworkRisk-WeightedAssets(RWA)TohighriskscorrespondhighlevelsofcapitalCollateralascreditprotectionLiquidityriskandoperationalrisk(amongothers)tobeassessed
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II.THEREGULATORYTREATMENTOFCOLLATERAL
SecurityRightsandCapitalRequirements
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CollateralAsEligibleCreditProtection
EligibleCollateral FirstPriority ClearSecurity
Rights
RapidlyEnforceable
LiquidSecondaryMarket
RiskReduction
LowerCapitalCharges
UNCITRALModelLawisthefirststepNotallcollateralreducebankscapitalrequirements
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TheProblemSuspiciousattitudetowardsmovables,dueto:– Assumedlimitedliquidity– Assumedlimitedsecondarymarkets– Fearofcyclicaldepreciation
Regulationmayestablishdifferentformalities– E.g.,detaileddescriptionofencumberedassets
Lackofcoordinationatthenationallevel
Banksmaynotfullybenefitfromsecuredtransactionslawreforms
PolicyConcerns
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III.COORDINATIONMECHANISMSBuildingLegalCapacity
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International
National
Firm-level
• UNCITRAL• BaselCommittee(BIS)
• ImplementationofModelLaw&BaselAccords
• Coordinationamonglegislativeacts
• Supervisorydiscretion
• Banksmayuseowninternalmodelstocalculatecapitalcharges
• Contractualmechanismstoreducecreditrisk
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BuildingLegalCapacityattheNationalLevel
IRBMethodologies(moresophisticated)Guidancetoidentifysufficientlyliquid
assets Guidanceoverthemodels
SupervisoryDiscretion(generalapproach)
Listof‘eligiblecollateral’(lowriskassets)
DefiningrequirementsinlinewithUNCITRAL ‘Provisioning’rules
BaselAccords
SupervisoryDiscretion(Pillar2) InternalRisk-Based(IRB)Methodologies
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DrGiulianoG.Castellanog.g.f.castellano(at)warwick.ac.uk
Thankyou!
