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EU parliament urges public registers for asset-backed securities

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, in this file picture taken October 28, 2015. REUTERS/Francois Lenoir/Files

By Francesco Guarascio BRUSSELS (Reuters) - The European Union plan to revive the bloc's asset-backed securities (ABS) market should include public registers showing investors' positions and data on underlying assets, the lawmaker in charge of the plan proposed on Friday. The move is likely to delay the adoption of the plan proposed in September by the European Commission, the EU executive arm, and which was meant to quickly relaunch a market that has not recovered in Europe after the 2007-08 financial crisis and it remains nearly 80 percent below its 2008 pick. The relaunch of the ABS or securitisation market in Europe "will depend on reducing information asymmetry and moral hazard that are inherent to this market," centre-left MEP Paul Tang said in a working document released on Friday. Tang is in charge of steering the securitisation plan through the EU Parliament. He backed the Commission's proposal to set up a new category of "simple, transparent and standardised" (STS) debt which would benefit of lower capital requirements. But he also proposed to amend the plan so that it included the setting up of "a public register that will contain the essential information of securitisations, and which investor holds which position," he said in the document. He said that lack of sufficient and updated information on the assets used as collateral to issue securities is a crucial reason for the subdued European market. More transparency would help relaunch the sector, he said. He warned that asset-backed securities, which provide money for home loans, car loans and credit card debts, were at the origin of the U.S. subprime crisis and past mistakes should not be replicated rushing to approve a delicate reform. While the EU commissioner for financial services Jonathan Hill urged a quick adoption of the plan, Tang asked for more time to assess it and delayed the Parliament vote until at least December, according to a timetable of the assembly's works. Tang also questioned the involvement of the European Central Bank in the reform process. The ECB has openly backed the Commission's proposals. "The role of the ECB in this regard, as both supervisor and stakeholder pushing for swift implementation, is rather dubious," Tang said, stressing the ECB has a vested interest in reviving the ABS market because securitisation is now a key tool for executing monetary policy. (Reporting by Francesco Guarascio Editing by Jeremy Gaunt.)