LMA publishes a guide to financial regulation and the loan market01 October 2015
The LMA has published an in-depth guide to regulation (the "Guide") that seeks to inform loan market participants active in the market about key aspects of financial and tax regulation currently affecting (or soon to affect) the loan market in Europe (including Basel III, CRD IV, Solvency II, AIFMD, MiFID, FATCA and BEPS) and the manner in which they are likely to impact. The Guide also assesses the cumulative effect of these measures and what they, as a package, could mean for the syndicated loan market going forward.
Loan market activities are, without a doubt, still subject to increased pressure from regulation and, over the course of the last seven years, the LMA has raised numerous concerns with regulators and government authorities regarding the sheer volume of legislation and other proposals, which have hung over the market since the financial crisis first began in late 2007/early 2008. These concerns emanate largely as a result not of the underlying policy decisions which govern these measures but rather the negative consequences (both intentional and unintended) that they create for both the syndicated loan market and LMA members more generally.
The Guide was produced in an effort to assist loan market participants active in Europe as they seek to adapt to a permanently changing financial landscape. This landscape has become something that has impacted the market from every possible angle, not only forcing a fundamental reassessment of the product, but also triggering concerns for loan market practices, its infrastructure, and the internal requirements, structures and procedures of its many lenders. It is also hoped that the Guide will assist new investors to the market, enabling them to understand their regulatory responsibilities and to navigate regulatory hurdles.
Nicholas Voisey, Director, LMA, commented:
"Whilst it is encouraging to see regulators now attempting to unlock investment within the financial markets, our members continue to indicate that regulation remains one of the greatest barriers to further development of the loan product. We hope that this Guide will assist them in understanding precisely how regulation could impact their offering."
"We continue to stress that unless regulation is proper, proportionate and appropriately targeted to both the asset and the investor, there is a real risk of it becoming a drag on the provision of credit and an impediment to economic recovery and growth."
"Notwithstanding the above, the loan product has come through the regulatory maelstrom reasonably well, in no small part due to the efforts of the LMA. This has been achieved by educating regulators of the negative impact of some of their more egregious proposals."