The Association for Financial Markets in Europe (AFME) has commented on the European Banking Authority's proposal for the definition of assets qualifying for preferential treatment, stressing the importance of keeping the definition at the transaction rather than tranche level. A tranche-based approach "implies that the purpose of qualification is to reduce or eliminate risk", AFME documents said, while the regulators' efforts should focus on "transparency and the ability to understand and model risk, rather than an attempt to reduce or eliminate risk", it said.
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