Risk Retention in Securitisation and Empty Creditors: When Financial Regulation (Positively) Spills Over Corporate Governance

Q2 Social Sciences

European Business Law Review Pub Date : 2022-07-01 DOI:10.54648/eulr2022029

Edoardo D. Martino, Evgenia Chouliara

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Abstract

The risk retention rule was introduced in the US and the EU as a mechanism to curb the originate-to-distribute model, associated with securitisations and the financial crisis of 2008. This article argues that besides its original financial stability rationale, the rule has positive spillovers on debt governance and specifically on the incentives to monitor, the design of covenants and the lender’s stance during renegotiation and bankruptcy (the ‘empty creditor’ problem). Risk retention in true sale securitisations makes the strongest case for debt governance, although the existence of various options of retention appears to be associated with varying incentives. For cases where monitoring is performed by a party different than the originator, the introduction of retention by the servicer is a promising although partial solution. The mechanism and effects of risk retention on synthetic securitisations remain ambivalent, given the perverse incentives associated with over-insurance (negative economic ownership). However, the upcoming restriction of double hedging for synthetic STS transactions is a positive development. Law & Finance, Financial Regulation, Debt Governance, Securitisation, Risk Retention

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证券化中的风险保留和空债权人:当金融监管(正面)溢出公司治理时

风险保留规则是在美国和欧盟引入的，作为遏制源自分销模式的一种机制，该模式与证券化和2008年金融危机有关。本文认为，除了其最初的金融稳定理由外，该规则对债务治理，特别是对监督激励、契约设计以及贷款人在重新谈判和破产期间的立场（“空债权人”问题），也有积极的溢出效应。真实销售证券化中的风险保留为债务治理提供了最有力的理由，尽管各种保留选择的存在似乎与不同的激励因素有关。对于由不同于发起人的一方执行监控的情况，由服务商引入保留是一个有希望的解决方案，尽管部分解决方案。考虑到过度保险（负经济所有权）带来的不正当激励，风险保留对合成证券化的机制和影响仍然是矛盾的。然而，即将对合成STS交易进行双重套期保值的限制是一个积极的发展。法律与金融、金融监管、债务治理、证券化、风险保留

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来源期刊

European Business Law Review Social Sciences-Law

CiteScore

1.10

自引率

0.00%

发文量

期刊介绍： The mission of the European Business Law Review is to provide a forum for analysis and discussion of business law, including European Union law and the laws of the Member States and other European countries, as well as legal frameworks and issues in international and comparative contexts. The Review moves freely over the boundaries that divide the law, and covers business law, broadly defined, in public or private law, domestic, European or international law. Our topics of interest include commercial, financial, corporate, private and regulatory laws with a broadly business dimension. The Review offers current, authoritative scholarship on a wide range of issues and developments, featuring contributors providing an international as well as a European perspective. The Review is an invaluable source of current scholarship, information, practical analysis, and expert guidance for all practising lawyers, advisers, and scholars dealing with European business law on a regular basis. The Review has over 25 years established the highest scholarly standards. It distinguishes itself as open-minded, embracing interests that appeal to the scholarly, practitioner and policy-making spheres. It practices strict routines of peer review. The Review imposes no word limit on submissions, subject to the appropriateness of the word length to the subject under discussion.