02 December 2015

Capital markets union: Council agrees its negotiating stance on securitisation

The agreement, brokered by the Luxembourg presidency, comes just nine weeks after the Commission made its proposal. It will enable the incoming presidency to start talks with the European Parliament as soon as possible in 2016. 

“These proposals aim to relaunch the securitisation market, by promoting simple, transparent and standardised securitisations. The objective is to contribute to the financing of the economy and hence to the creation of jobs and growth,” said Pierre Gramegna, minister of finance of Luxembourg and president of the Council. 

First building block 

A framework for securitisation is the first major building block of the EU's plan, launched during 2015, to develop a fully functioning capital markets union by the end of 2019. Developing a securitisation market will help create new investment possibilities and provide an additional source of finance, particularly for SMEs and start-ups. [...]

Simple, transparent and standardised products 

Building on what has been put in place to address risk, the proposals are expected to help differentiate simple, transparent and standardised (STS) products. The concept of “simple, transparent and standardised” refers not to the underlying quality of the assets involved, but to the process by which the securitisation is structured. 

Two regulations 

The agreement reached by Coreper covers two draft regulations:

• one setting rules on securitisations and establishing criteria to define STS securitisation;
• the other amending regulation 575/2013 on bank capital requirements.

The first brings together rules that apply to all securitisations, including STS securitisation, that are currently scatttered amongst different legal acts. It thus ensures consistency and convergence across sectors (such as banking, asset management and insurance), and streamlines and simplifies existing rules. It also establishes a general and cross-sector regime to define STS securitisation. 

The text amending regulation 575/2013 sets out capital requirements for positions in securitisation. It provides for a more risk-sensitive regulatory treatment for STS securitisations.

Full press release

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