European Council agrees negotiating position to simplify EU securitisation rules, cut capital charges for low-risk deals and raise UCITS investment limits

The European Council agreed its negotiating position on targeted changes to the EU’s prudential and regulatory framework for securitisation, aiming to revive market activity and reduce compliance burdens as part of the Savings and Investment Union initiative. The package amends the Capital Requirements Regulation and the Securitisation Regulation to support funding for the real economy, including SMEs and infrastructure. The mandate recalibrates bank capital requirements for securitisation exposures on a more risk-sensitive basis, providing materially lower requirements for low-risk securitisations while keeping requirements for riskier transactions at current levels. It retains the Commission’s proposed “resilient” securitisation category and pairs it with the simple, transparent and standardised (STS) label to deliver deeper capital savings and incentives for safer market practices. Administrative requirements are simplified by allowing third-party verification for STS assessments and by removing proposed administrative sanctions for institutional investors. On the demand side, the position raises the concentration limit for undertakings for collective investment in transferable securities (UCITS) to acquire up to 50% of securities in a single public securitisation, from 10%. With the Council’s position agreed, negotiations with the European Parliament can begin to finalise the legal texts.