European Commission proposes targeted changes to EU securitisation and prudential rules to revive the market

The European Commission has adopted a package of measures to simplify the EU securitisation framework and make it more fit for purpose, with the stated aim of facilitating securitisation activity while safeguarding financial stability. The initiative is presented as the first legislative proposal under the Savings and Investments Union (SIU) Strategy. The package proposes targeted amendments to the Securitisation Regulation to reduce operational costs for issuers and investors and to simplify certain due diligence and transparency requirements. It also proposes changes to the Capital Requirements Regulation (CRR) to introduce more risk sensitivity in banks’ prudential treatment of securitisation exposures. Separately, draft amendments to the Liquidity Coverage Ratio (LCR) Delegated Regulation have been published for consultation to address inconsistencies in the eligibility requirements for securitisations to be included in banks’ liquidity buffers, and draft amendments to the Solvency II Delegated Regulation are planned to better reflect the actual risks of securitisation and remove unnecessary prudential costs for insurers investing in securitisations. The proposed amendments to the Securitisation Regulation and CRR will be submitted to the European Parliament and the Council for consideration and adoption. The LCR delegated act changes are open for feedback via a four-week consultation, and the Solvency II delegated act amendments are expected to be published in the coming weeks for feedback.