The European Commission has released new measures to update its securitisation legal framework, aiming to support activities in the EU and enhance transparency and security.
The system of securitisation, where loans and debts held by banks and other financial institutions are sold to investors, allows for sharing credit risk and boosting investments. The Commission believes the new regulations will strengthen the EU securitisation market, eliminating barriers and promoting more activities for potential buyers.
As the Commissioner for Financial Services and the Savings and Investments Union Maria Luis Albuquerque said, “today’s proposals will contribute to reviving the EU securitisation market by simplifying and enhancing our regulatory and prudential framework while preserving robust safeguards to ensure financial stability.”
The new measures include a reduction in operational costs for issuers and investors, making EU securitisation more attractive and easier to manage. In addition, changes will have higher risk sensitivity for banks that issue securitisations. The Commission also aims to clarify any potential inconsistencies in requirements, creating a more suitable environment for banks and other interested investors.
These changes to the Securitisation Regulation, the Liquidity Coverage Ratio (LCR) Delegated Regulation, and the Capital Requirement Regulation (CRR) of the EU will be discussed by the European Parliament and European Council. The Commission will also soon unveil amendments to Solvency II Delegated Regulation.
Commenting on the changes, Albuquerque said “we, count on the support of the financial industry to strengthen the EU securitisation market, and I clearly expect it to use this fit-for-purpose framework to provide more funding to households and businesses, including SMEs.
