European Commission proposes measures to revitalise the EU Securitisation Framework

Introduction

On 17 June 2025 the European Commission unveiled a new legislative package aimed at reforming the EU securitisation framework. The initiative seeks to revitalise the securitisation market while maintaining prudential safeguards.

Maria Luís Albuquerque, the Commissioner for Financial Services and the Savings and Investments Union, stated “the proposals will contribute to reviving the EU securitisation market by simplifying and enhancing our regulatory and prudential framework.”

At the same time, financial stability remains a top priority. The new securitisation framework will be “simpler and more fit for purpose,” aiming to enhancing access to capital and supporting real economy investments.

 

Background

The current legal framework is set out in Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 (the Securitisation Regulation), which entered into application on 1 January 2019. It was introduced in response to the systemic risks exposed by the 2008 global financial crisis and to the concerns surrounding cryptic and risky securitisation practices.

The Securitisation Regulation focused on enhancing transparency, ensuring investor protection and introducing standardised rules. The EU attempted to address risks inherent in highly complicated and risky securitisations and apply a more risk-sensitive framework. At that time, strict requirements were deemed necessary as the only way to restore the severed reputation of the securitisation market.

While the current framework was successful in rebuilding investor confidence and trust, its conservative design has been criticized for restricting market growth. Striking a better balance between prudential safeguards and flexibility for market development has become a policy priority.

The Eurogroup Statement of 11 March 2024 invited the European Commission to conduct a comprehensive assessment of the structural obstacles – both on the supply and demand side – which hinder the development of the EU securitisation market. The request included a review of the prudential treatment of securitisations for banks and insurance companies, as well as the reporting and due diligence obligations imposed by current regulation.

The European Council's Conclusions of 17 and 18 April 2024 reaffirmed the urgency of the matter by explicitly calling for a relaunch of the European securitisation market, through targeted regulatory and prudential reforms. The broader objective was strengthening the competitiveness of the EU.

Enrico Letta and Mario Draghi also echoed these concerns in separate reports in 2024. Enrico Letta, in April 2024, emphasised that “Securitization acts as a unique link between credit and capital markets” underlining its untapped potential. His report advocates specific reforms to improve the accessibility, transparency, and efficiency of securitisation framework. Similarly, Mario Draghi, in September 2024, urged the EU to “expand bank finance, overcoming excessively restrictive regulation on securitisation, and where necessary revisit prudential regulation to have a strong and competitive banking system.” His invitation does not come as a surprise given that the European securitisation framework is too strict with respect to prudential, transparency and disclosure requirements.

Both calls reflect a broader consensus that the existing framework is overly cautious, especially when compared to international standards. As a case in point, the EU’s securitisation volumes in 2022 represented just 0.3% of its GDP, compared to 4% in the US. 

In light of the above, the European Commission has put forward a targeted legislative proposal to amend the Securitisation Regulation, aiming to remove regulatory obstacles and incentivise greater participation by financial institutions in securitisation markets.