The French authorities have recently proposed measures to streamline regulatory and administrative processes within the European agenda. Now, it is essential to translate the European Commission’s announcements into ambitious and effective actions to meet this challenge. To this end, France is advocating for a bold simplification agenda to send a strong, positive signal to European businesses.
As part of this initiative, the French authorities are specifically proposing key reforms to the European Securitisation Framework, including the following:
Easing Due Diligence Requirements
France calls for a more pragmatic approach to investor due diligence in securitisation transactions. The current framework is excessively complex and prescriptive, creating unnecessary burdens. A principle-based approach would allow investors to focus on risk assessment without being weighed down by rigid regulations. Additionally, due diligence obligations should be tailored to the nature of the transaction—particularly for simple, transparent, and standardised (STS) securitisations—ensuring efficiency without compromising investor protection.
Streamlining Reporting Obligations
Current reporting requirements for securitisation transactions are overly detailed and often exceed investors’ actual needs. France proposes a more proportionate framework, reducing unnecessary granularity, particularly for securitisations involving highly homogenous receivables. This would ensure that reporting remains effective while alleviating unnecessary administrative burdens.
Strategic Importance of Reforms
These proposed reforms are part of a broader effort to revitalize the European securitisation market, a key pillar in building the Capital Markets Union and enhancing financing, particularly for SMEs. Simplification and efficiency improvements are crucial to unlocking the full potential of securitisation as a financing tool.
Beyond Bureaucracy: A Critical Consideration
While the focus of the French proposal is on reducing bureaucracy, one crucial aspect must not be overlooked: the recalibration of capital requirements. Cutting bureaucracy alone will not be enough to revive securitisation in Europe. Addressing capital weights no less important to ensure a meaningful and lasting impact on market growth.