On 17 June 2025, the European Commission (Commission) published a legislative package on the review of the securitisation framework in the EU.

Background

The current EU securitisation framework consists of the Securitisation Regulation, which sets out a general framework for all securitisations in the EU and a specific framework for simple, transparent, and standardised (STS) securitisations, as well as prudential requirements for securitisation positions in the Capital Requirements Regulation (CRR) and the Solvency II Delegated Regulation  (Solvency II), and liquidity requirements in the Liquidity Coverage Requirement Delegated Regulation ((EU) 2015/61) (LCR Delegated Regulation).

Although the 2019 framework improved transparency and standardisation in the securitisation market, the Commission stated previously that issuance and investment barriers remain high. The Commission has therefore been considering possible amendments to the framework, and this was given additional impetus by the March 2024 Eurogroup statement of the future of the Capital Markets Union. In October 2024, the Commission held a targeted consultation on the functioning of the EU securitisation framework.

Legislative package

In essence, the legislative package consists of the following, separate, proposals:

  • Proposal for a Regulation amending the Securitisation Regulation laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation.
  • Proposal for a Regulation amending the CRR as regards requirements for securitisation exposures.
  • Proposal for a Delegated Regulation amending the LCR Delegated Regulation as regards the eligibility conditions for securitisations in the liquidity buffer of credit institutions.

The Commission indicates in its proposals that all of the above initiatives should be considered as a single package, meaning that the success of the EU securitisation framework depends on the combination of all the proposed changes contained in each of the proposals.

Content

In terms of content of the package, the following is worth noting:

Proposed Regulation amending the Securitisation Regulation

The Commission proposes the following key amendments:

  • Due diligence: The Commission proposes to remove some of the verification requirements for investors in the event that the sell-side party responsible for complying with the relevant sell-side provisions is established and supervised in the EU. Also, the required risk assessment that investors need to undertake before holding a securitisation is amended to make it more principles based. At present, the risk assessment should be made on the basis of a detailed list of features that an investor needs to confirm. The proposal also removes the long list of topics that institutional investors holding a securitisation need to address in their written policies used to monitor the performance of their positions and the underlying exposures. This should give these investors more freedom to adopt written procedures in a principle-based manner. Finally, investors in secondary market securitisation transactions are given fifteen calendar days to document their due diligence.
  • Securisations with guarantees: The Commission proposes to waive risk retention requirements and verification and documentation requirements for securitisations that include a first loss tranche that is guaranteed or held by a (narrowly defined) list of public entities and where that tranche represents at least 15 per cent of the nominal value of the securitised exposures.
  • Transparency: The proposal contains a mandate for a review of the reporting templates contained in Commission Delegated Regulation (EU) 2020/1224 and Commission Implementing Regulation (EU) 2020/1225 to reduce the required fields by at least 35 per cent and to make distinctions between mandatory and voluntary fields. The updated transparency rules would also not require loan level information when the underlying exposures are highly granular and short-term (such as credit card exposures). The Commission also proposes to make a distinction between private and public securitisations, whereby the transparency requirements for the former would be lighter than for the latter. The reporting template for private securitisations would need to be reported to the securitisation repositories.
  • STS requirements: To facilitate the securitisation of SME loans in STS securitisation, the Commission proposes to amend the homogeneity requirement to stipulate that a securitisation where at least 70 per cent of the underlying pool of exposures consist of SME loans are deemed to comply with that requirement. Currently, the underlying pool of exposures must consist for 100 percent of SME loans.
  • Third party verifiers: In addition to being authorised, the Commission proposes that third party verifiers need to be supervised by their respective national competent authority as well.
  • Supervision: With the aim of promoting supervisory convergence and less fragmentation of supervision by the national competent authorities, the Commission proposes to give the securitisation sub-committee of the Joint Committee of the European Supervisory Authorities the mandate to adopt guidelines to establish common supervisory procedures and to develop reporting templates. The European Banking Authority will lead the sub-committee.

Proposed Regulation amending CRR as regards requirements for securitisation exposures

The Commission proposes the following key amendments:

  • Amendments to risk weight floors for senior positions: Risk weight floors are minimum risk weights that credit institutions issuing and investing in securitisation must apply to their securitisation exposures. The current framework allows for two fixed risk weight floors for senior positions: a 10 per cent risk weight floor for the exposure to a senior position of STS transactions, and a 15 per cent risk weight floor for the exposure to a senior position of non-STS transactions. The Commission proposes to introduce the new concept of a risk-sensitive risk weight floor, where the risk weight floors for senior securitisation positions are proportionate to the riskiness of the underlying pool of exposures.
  • Amendments to the (p) factor: The (p) factor is a parameter driving the ‘non-neutrality’ of the securitisation capital requirements for securitisation exposures held by credit institutions. It is one of the parameters used in the formulae for calculating securitisation risk weights, and it increases the amount of capital for securitisation positions, above what would be required for the underlying exposures if they were not securitised. The Commission proposes targeted amendments to introduce more risk sensitivity in the (p) factor, to prevent that this factor leads to excessive risk weights to securitisation transactions.

Amendments to the LCR Delegated Regulation

The Commission proposes the following key amendment:

  • The LCR requirement sets out the amount and characteristics of liquid assets for credit institutions in the EU to meet their short-term liquidity requirements. Under a number of conditions, securitisations are considered eligible assets for the liquidity buffer of credit institutions. To enhance the eligibility of securitisations to be part of the liquidity buffer, the Commission proposes a few amendments, such as enhanced staggering in the eligibility conditions, and the removal of the condition for securitisations to have a remaining weighted average life of five years to be eligible.

Next steps

The proposed Regulation amending the Securitisation Regulation and the proposed Regulation amending the CRR have been submitted to the European Parliament and the Council (co-legislators) for consideration under the ordinary legislative procedure. The co-legislators will review the proposals and consider amendments. This procedure is expected to take at least one year.

The amendments to the LCR Delegated Regulation are subject to a public consultation. The deadline for responses is 15 July 2025. Following the consultation, the Commission will formally adopt the Delegated Regulation, after which the co-legislators can endorse or reject it (without the ability to file amendments). Following this scrutiny period, which normally takes two months, the Delegated Regulation can be published in the EU Official Journal.