In order to deliver on the Commission’s commitment in the capital markets union (CMU) action plan and in order to prepare the report mandated by Article 46 of the Securitisation Regulation (the “SECR”), this Consultation on the functioning of the EU securitisation framework seeks stakeholders’ feedback on a broad range of issues. The Commission’s obligation under Article 46 of the SECR is to submit a report on the functioning of the SECR to the European Parliament and to the Council by 1 January 2022.

The  Consultation covers the areas mandated by Article 46 of the SECR, namely:

• the effects of the regulation (Section 1);
• private securitisations (Section 2);
• the need for an equivalence regime in the area of STS securitisations (Section 5);
• disclosure of information on environmental performance and sustainability (Section 6); and
• the need for establishing a system of limited licensed banks performing the functions of SSPEs – securitisation special purpose entities (Section 7)

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In addition, the Consultation seeks feedback on a number of additional issues that have been identified and raised by stakeholders and by the Joint Committee of the ESAs as having an impact on the functioning of the securitisation framework.”

The SECR aimed at developing a simple, transparent and standardised securitisation market. As reflected in the above table summarizing the main objectives of SECR, ALFI is of the view that overall these objectives have not or have only partially been achieved.

The main outcomes may be summarised as follows:
- SECR is perceived by the main actors of the securitisation market as being the source of demanding
regulatory requirements (in particular as to transparency) triggering material additional human and financial
costs without any obvious added-value, especially as far as institutional investors are concerned. Moreover, the said actors have not identified any clear wider access of the public to securitisation products;
- Moreover, it has been noticed by our members that some of the rules contemplated by the SECR have
generated some adverse effects, such as disadvantaging EU institutional investors in certain segments of
the market. We may refer in particular to the accessibility of EU institutional investors to the US securitisation market. Indeed, although this market is very attractive and the demand is high (particularly US CMBS), our members face some difficulties to invest in US securitisation positions. One of the main reasons mentioned by our members is the reluctance of US issuers to commit to comply with the transparency requirements contemplated by Article 7 of SECR and the corresponding disclosure in their offering documents (i.e. disclosure stating no intention or covenant to comply with Article 7 SECR). As a consequence, our members may be prevented from purchasing these securitisation positions although they potentially satisfy both the US Dodd-Frank Act and EU risk-retention requirements (except for Article 7 of the SECR).
This puts at disadvantage EU institutional investors in a context of increasing globalization and an
equivalence regime on transparency disclosures between the US and the EU should be initiated to limit
those disadvantages. ALFI would welcome ensuring that the objective of improving the competitiveness of
the European financial industry be part of the review of the securitisation framework....

Click here to read ALFI’s feedback.