01 February 2016

European Parliamentary Research Service: Common rules and new framework for securitisation

In autumn 2015, the European Commission proposed, in the context of the Capital Markets Union initiative, a regulation on securitisation. The proposal followed a consultation with stakeholders and took into account initiatives at global (IOSCO) and European levels (EBA). The Commission’s aim is to restore investor confidence in securitisation transactions and contribute to reviving the real economy through increased financing and targeted risk allocation. The proposal replaces existing rules relating to due diligence, risk retention, transparency and supervision with a uniform regime. It provides a framework to identify simple, transparent and standardised (STS) securitisations and to allow investors to analyse associated risks. The proposal came as a package with a second proposal, to amend the Capital Requirements Regulation applicable to credit institutions and investment firms in respect of securitisation. In November 2015, the Council agreed its approach on both proposals

The proposal applies to securitisations issued as of 1 January 2011, as well as those issued before that date where new exposures have been added or substituted after 31 December 2014. The first part of the proposal harmonises the rules that apply to all securitisations with regard to due diligence, risk retention, and transparency, while the second part sets out the criteria for long- and short-term STS securitisations, as well as rules regarding supervision and sanctions.

Full briefing

Related briefing: Securitisation and capital requirements

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