EU securitisation reform: ECON draft reports and Council of the EU compromise texts published

The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published two draft reports following the European Commission's (EC) securitisation package (adopted in June) which aims to strengthen and simplify the EU securitisation framework. The first report proposes amendments to the EC's legislative proposal for a Regulation amending the Capital Requirements Regulation (CRR) as regards requirements for securitisation exposures. While supportive of the EC's objectives, the rapporteur is concerned that the proposal may not fully achieve them, particularly where the primary aim should be to ensure greater risk adequacy within the regulatory framework. The report notes that introducing the concept of "resilient positions" introduces additional complexity and may hinder market development. The rapporteur therefore recommends several simplifications for synthetic securitisations and the removal of the resilient concept for traditional securitisations, where instead, the well-established simple, transparent and standardised (STS) category should be reinforced, and all STS senior tranches of traditional securitisations should be treated as "resilient".

The second report proposes amendments to the EC's draft proposal amending the Securitisation Regulation (SECR). While supportive of the amendments proposed by the EC, the report states that broadening the definition of public securitisations to include private transactions could have a severe impact on the market, resulting in unnecessary and disproportionate costs for additional depositories. The report therefore proposes to maintain the current definition which distinguishes between public and private transactions, which has worked well in the past. It is also supportive of streamlining due diligence for EU securitisations.

In parallel, the Council of the EU published the following compromise texts: document 16740/25 which sets out the Council's compromise proposal on amending the SECR; while document 16741/25 contains the Council's compromise proposal on the Regulation amending the CRR as regards requirements for securitisation exposures. The Council also published an "I" Item Note from its General Secretariat inviting the Permanent Representatives Committee (COREPER) to adopt the proposed compromise texts as the Council's negotiating mandate for upcoming trilogue negotiations with the European Parliament.

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