On 17 June 2025, the European Commission released a set of legislative proposals to revitalise the EU’s securitisation framework. These reforms aim to enhance transparency and make securitisation a more robust financing tool. They also support the first major initiative under the broader Savings and Investments Union (SIU) Strategy to increase capital flow, strengthen the financial ecosystem and drive investment and sustainable growth throughout Europe.  

Through securitisation, banks and other financial institutions can combine loans like mortgage or corporate loans and turn them into marketable securities. This helps them free up money to expand their lending capacity and share financial risk with outside investors.  

What are the proposed changes?

The Commission proposed amendments to the Securitisation Regulation, Capital Requirements Regulations (CRR) and Liquidity Coverage Ratio (LCR).  

Securitisation Regulation  

The revised framework introduces more streamlined due diligence and transparency requirements for institutional investors to reduce compliance burdens. For secondary market transactions, investors will have a 15-day window to complete their due diligence assessments. Eased requirements also apply to securitisations backed by development banks or public entities if they hold at least 15 per cent of the first-loss tranche.  

The EU will relax risk retention rules when the riskiest portion of securitisation is held or backed by designated public entities. Additionally, reporting requirements for private securitisations will be simplified, focusing more on supervision than data disclosure to investors. The Commission also introduces new definitions to clarify what counts as public vs. private securitisation, enhances the Simple-Transparent and Standardised (STS) rule to support SME loan securitisation and strengthens supervisory oversight through the European Banking Authority.  

Capital Requirements Regulation (CRR)  

The proposed changes to the Capital Requirements Regulation include a new risk-sensitive floor for senior securitisation positions and reduced “p factor” calculations, especially for senior and originator positions as well as for STS securitisations. The Significant Risk Transfer (SRT) framework will be updated, shifting from mechanical to principle-based self-assessments and stress tests. This measure aims to optimise the securitisation framework in reducing financial risk and facilitating capital efficiency.  

Liquidity Coverage Ratio (LCR) Delegated Regulation  

Proposed changes to the Liquidity Coverage Ratio (LCR) Delegated Regulation aim to broaden the eligibility of securitisation instruments that qualify for banks’ liquidity buffers, helping boost investment in the securitisation market.  

Solvency II (forthcoming)  

The Commission has indicated forthcoming amendments to the insurance prudential rulebook under the Solvency II Delegated Regulation. These changes will include updated provisions for the prudential framework for both STS and non-STS securitisations to ease capital requirements for insurers.

Next steps

The EU securitisation reform package proposals mark the initial steps of a legislative process toward revitalising the securitisation market. During the consultation period on proposed amendments to the Liquidity Coverage Ratio (LCR) Delegated Regulation, stakeholders may provide their feedback until 15 July 2025. With the EU cementing its presence in global capital markets, these securitisation reforms could transform Europe’s financial potential into market performance.  

If you have further questions or need tailored support on navigating the EU securitisation reform, feel free to contact our Bolder team for trusted advice.  

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