Today, the European Commission published legislative proposals to strengthen the securitisation markets in Europe. The package includes not only the announced amendments to the EU Securitisation Regulation (SECR) and the relevant parts of the Capital Requirements Regulation (CRR), but also the delegated acts on the liquidity coverage ratio (LCR). The proposals on the SECR and CRR differ only in a few respects from the draft versions circulated three weeks ago and will be introduced into the legislative process. The proposals on the LCR are new, and a consultation period of only four weeks is planned.
The TSI welcomes the European Commission’s proposals in principle, as they offer an opportunity to strengthen the securitisation markets and increase Europe’s competitiveness in the long term. However, after an initial reading, it is clear that the European Commission’s ‘balanced proposals’ do contain a number of improvements, but these come with numerous restrictions and at the price of excessive complexity. Further improvements appear to be necessary here.
Below, we highlight some key aspects with a brief assessment:
SECR
- Art. 5: We welcome the proposed simplification of due diligence requirements, as this will reduce unnecessary double or triple burdens without compromising quality. Unfortunately, the introduction of additional, disproportionate liability rules could have the opposite effect.
- Art. 7, public securitisations: The removal of dysfunctional reporting requirements is, of course, the right thing to do. At the same time, it must be ensured that the new, very broad definition of public securitisations does not lead to collateral damage and that bilateral or syndicated transactions are not suddenly classified as public.
- Art. 7, private securitisations: We welcome the proposed reporting requirement for private securitisations to a securitisation repository. The relevant evidence has been provided by AFME, EDW and TSI over the past four years as part of the European Benchmark Exercise (see TSI kompakt of 24 February 2025), in which 12 European banks contributed significantly to market transparency in the ABCP market through voluntary reporting. However, the following points must be taken into account as a matter of urgency:
- The objective must be market transparency at an aggregate level for supervisory authorities, as formulated by the European Commission.
- The reporting template must be significantly reduced and designed at transaction level instead of loan level data.
- The reporting template must be developed jointly by the ESAs, the SSM and market participants and replace existing duplicate reporting.
- The reported data will only be published in aggregate form.
- No additional liability risks for market participants from within or outside the EU may arise.
CRR
- The proposed reduction in disproportionate capital requirements is a step in the right direction. However, a more detailed assessment of the proposals by the banks is awaited – the rules are too complex for a quick assessment. It cannot be ruled out that the impact on some banks could be very limited or even negative.
- The introduction of an additional category of “resilient” securitisations carries the risk of further market fragmentation and increased costs. It seems as if the handbrake is being applied too hard, forcing us to continue driving at walking pace in a 30 km/h zone.
- We welcome the planned consideration of STS for synthetic balance sheet securitisations with insurance companies. It remains to be seen whether the conditions for a larger number of (re-)insurers can be met.
LCR
- The planned adjustments to the LCR require more detailed analysis and assessment by the banks involved. Since securitisations have at least as high market liquidity as covered bonds, the measures must enable banks to diversify their liquidity portfolios by including senior tranches from securitisations. The impact on financial market stability is positive.
Relevance for the SIU and Europe’s competitiveness
As the first package within the framework of the Saving and Investment Union (SIU), the successful implementation of this legislative proposal will be of great importance for all parties involved in the political process and will send a signal to the following, certainly even more relevant topics within the framework of the SIU.