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.

Proposed changes

The proposed legislative package seeks to revive the securitisation framework and support market engagement while upholding financial stability. In particular, the amendments aim to:

• reduce unnecessary operational costs for issuers and investors, by streamlining disclosure, reporting, and supervisory processes, without compromising standards on transparency and investor protection; and
• revise the prudential treatment of securitisations for banks and insurers to better reflect the actual risk profile of securitised exposures – particularly in the context of simple, transparent and standardised (STS) securitisations – and eliminate excessive capital costs that currently discourage issuance.

The proposed changes will be reflected in i) the Securitisation Regulation, ii) the Regulation (EU) 575/2013 of the European Parliament and of the Council (the Capital Requirements Regulation or CRR) and iii) two delegated Regulations – the Commission Delegated Regulation (EU) 2015/61 (the Liquidity Coverage Ratio (LCR) Delegated Act) and the Commission Delegated Regulation (EU) 2015/35 (the Solvency II (SII) Delegated Act). The proposed measures are intended as a coherent reform package, addressing clarity, proportionality, and market efficiency.

Below there is a more detailed explanation of the proposal’s specific provisions.

Subject-matter and scope

The proposal clarifies the definition of a “servicer” without any intention of expanding its scope since a servicer is already subject to the Securitisation Regulation. The servicer is “an entity that manages a pool of purchased receivables or the underlying credit exposures on a day-to-day basis.”

Definitions of public and private securitisations

The proposal redefines public and private securitisations. A securitisation qualifies as public if i) a prospectus is drawn, ii) it’s marketed with notes constituting securitisation positions admitted to trading in specific trading venues, or iii) the transaction is offered to investors, but the terms are not negotiable. If the securitisation doesn’t meet any of these criteria, it is private.

Due diligence

The European Commission proposes several amendments to the due diligence requirements to reduce unnecessary burdens. Specifically:

• Verification requirements under Articles 5(1) and 5(3)(c) of the Securitisation Regulation no longer apply where the sell-side party is established and supervised in the EU and complies with applicable obligations.
• The risk assessment under Articles 5(3)(a) and 5(3)(b) of the Securitisation Regulation is simplified, by removing the detailed (and rigid) list of structural features that investors need to comply with, and by ensuring the level of due diligence is proportionate to the actual risk.
• Procedural documentation is streamlined by removing the written procedure requirements of Article 5(4)(a) of the Securitisation Regulation where they serve no added value.
• The timeframe for completing due diligence in secondary market transactions is extended by granting investors an additional 15 days.
• Delegation rules under Article 5(5) of the Securitisation Regulation are aligned with other sectoral legislations confirming that delegation does not transfer legal responsibility from the investor.
• Exemption from due diligence is granted where multilateral development banks fully guarantee the securitisation, making it very low risk.
• Lighter due diligence requirements apply (specifically by waiving the verification and documentation requirements), when the securitisation includes a first loss tranche that is guaranteed or held by specific public entities and where that tranche represents at least 15% of the nominal value of the securitised exposure.

In non-EU securitisations, investors are still required to verify compliance with EU rules.

Risk retention

Risk retention requirements under Article 6 of the Securitisation Regulation do not apply where the first loss tranche is either guaranteed or held by a specific public entity, provided that the tranche represents at least 15% of the nominal value of the securitised exposure. This proposal recognises the de-risking effect of public involvement in bearing initial losses.

Transparency

The European Commission proposes a substantial simplification of the disclosure framework. In particular:

• The number of mandatory fields in the reporting templates under Commission Delegated Regulation (EU) 2020/1224 and Commission Implementing Regulation (EU) 2020/1225 is reduced by at least 35%.
• Mandatory fields are clearly distinguished from optional ones.
• The reporting templates do not require loan level information when the underlying exposures are highly granular and short-term.
• The reporting templates must be reviewed by the securitisation sub-committee of the European Supervisory Authorities' (ESAs) Joint Committee, led by the European Banking Authority (EBA), in cooperation with the other ESAs.

Additionally, the reporting requirements for private securitisations will be less stringent than those for public securitisations. The templates have to align with existing notification templates, particularly the guide on the notification of securitisation transactions by the Single Supervisory Mechanism (SSM).

Securitisation repository

The obligation to report to a securitisation repository will be extended to cover private securitisations. The ESAs, the European Systemic Risk Board, the competent and resolution authorities and, upon request, the European Commission shall have free access to the repository. However, access for potential investors to private securitisations will be restricted to protect the confidentiality of sensitive transaction data.

STS requirements

The proposal amends the homogeneity requirement under Articles 20(8), (15) and Article 26(b)(8) of the Securitisation Regulation. It introduces a new threshold: a securitisation where at least 70% of the underlying exposures consist of small and medium-sized enterprise (SME) loans are deemed to comply with that requirement. This is a relaxation from the current 100% threshold and is expected to facilitate broader use of STS securitisations for SME financing.

Third-party verifiers

The European Commission proposes that all third-party verifiers assessing compliance with criteria (under Article 28 of the Securitisation Regulation) have to be both authorised and supervised by the respective National Competent Authorities (NCAs).

Supervision

Ensuring consistency and uniform application is of major importance. The proposal mandates the securitisation sub-committee to adopt guidelines that establish common supervisory procedures and develop the reporting templates mentioned above. Further, the EBA shall lead the securitisation sub-committee of the ESAs Joint Committee, provide the secretariat and a vice-chairperson for it, support the chairperson, and assume leadership when the chairperson is unavailable.

Additionally, the European Commission proposes the amendment of Article 29 of the Securitisation Regulation to clarify that banking NCAs will be responsible for supervising the application of the STS criteria in bank-originated securitisations. With respect to credit institutions in the Banking Union, the SSM will be the competent supervisor.

Finally, Article 32 of the Securitisation Regulation will include the list of circumstances where NCAs

Reports and Review

Article 44 of the Securitisation Regulation shall be updated to ensure that periodic reports not only cover market performance and regulatory compliance but also assess the contribution of securitisation to funding EU businesses and the economy.

 

Next steps

The proposal will now be submitted to the European Parliament and the Council for review and adoption. It will be interesting to see whether it will actually increase securitisation activity in the EU and whether financial institutions will use the liquidity to accommodate lending to households and SMEs.

We will continue to monitor financial and banking developments and publish our findings.