1. General overview.

On 17 June 2025 (the “Proposal Date”) the European Commission (the “EU Commission”) proposed certain amendments to the legal framework regarding securitisation transactions (the “Proposal”) to achieve the following objectives:

(1) Reducing excessive operational costs for issuers and investors;

(2) Adjusting the prudential framework for banks and insurers to better reflect actual risks and remove unneeded operational costs.

These objectives aim to remove undue issuance and investment barriers in the EU securitisation market within a general framework that continues to preserve financial stability, market integrity and investor protection.

The Proposal fits within a broader context, in which the EU Commission highlighted that the revival of the EU securitisation market, through the diversification of funding sources, can improve the availability of financing to the real economy, especially in the current economic and geopolitical context, where the European Union faces significant investment needs to maintain resilience and competitiveness.

From a more technical perspective, the Proposal, intended to be viewed as a single package, introduces a plurality of changes to the following set of rules:

(a) Regulation (EU) No. 2017/2402 of the European Parliament and of the Council (the “Securitisation Regulation”);

(b) Regulation (EU) No. 575/2013 of the European Parliament and of the Council (the “CRR”);

(c) Two delegated Regulations: (i) the Commission Delegated Regulation (EU) No. 2015/61 (the “LCR Delegated Act”), and (ii) the Commission Delegated Regulation (EU) No. 2015/35 (the “Solvency II Delegated Act”).

Regarding timing and procedures, the amendments to the Securitisation Regulation and the CRR(respectively the “SR Amendments” and the “CRR Amendments”) have been adopted as legislative proposal by the EU Commission and are currently under the European Parliament and the Council (co-legislators). On the Proposal Date, the draft amendments to the LCR Delegated Act has been published on the “Have Your Say” platform for a four-week consultation (the consultation period has now been closed). The EU Commission also planned to publish draft amendments to the Solvency II Delegated Act for feedback in the second half of July 2025 (although, at moment, this draft seems to be not available).

In this insight, we will focus exclusively – for the sake of brevity – on the SR Amendments and the CRR Amendments.

2. The SR Amendments: main changes.

The SR Amendments concern a variety of changes to the Securitisation Regulation, reflecting a systematic approach that seeks to achieve the objectives set out in the foregoing paragraph.

The main proposed amendments, are the following.

(i) Definitions of public and private securitisation (Article 2)

To clarify the application of certain obligations (e.g. transparency requirements), the SR Amendments introduce the definitions of public and private securitisation by adding points (32) and (33) to Article 2.

In particular, the aforementioned definitions are set forth as follows.

 
(1) “Public securitisation” means a securitisation that meets any of the following criteria:

(a) a prospectus has to be drawn up for that securitisation pursuant to Article 3 of Regulation (EU) No. 2017/1129 of the European Parliament and of the Council;

(b) the securitisation is marketed with notes constituting securitisation positions admitted to trading on a Union trading venue as defined in Article 4, paragraph (1), point (24) of Directive No. 2014/65/EU of the European Parliament and of the Council;

(c) the securitisation is marketed to investors and the terms and conditions are not negotiable among the parties.

(2) “Private securitisation” means a securitisation that does not meet any of the criteria listed above.

(ii) Due Diligence requirements (Article 5)

These amendments are aimed at easing certain due diligence requirements.
Firstly, a series of specific waivers and/or streamlining measures are provided for in certain circumstances [1].
Secondly, stronger waivers concerning entire aspects of due diligence (or all the due diligence requirements) are envisaged.

In this respect, due diligence requirements are waived when a multilateral development bank listed in Article 117, paragraph (2) of the CRR [2] fully guarantees the securitisation position.
Verification and documentation requirements are waived if (i) the securitisation provides a first loss tranche guaranteed or held by the European Union or national promotional banks or institutions [3] and (ii) the said tranche represents at least 15% of the nominal value of the securitised exposures.

(iii) Retention Rule waiver (Article 6)

 The waiver shall apply when the first loss tranche, representing at least 15% of the nominal value of the securitised exposures, is either held or guaranteed by one of the entities listed under points (a) to (f) of paragraph 5 [4].

(iv) Transparency reporting (Article 7)

The required fields regarding the reporting templates in Commission Delegated Regulation (EU) No. 2020/1224 and Commission Implementing Regulation (EU) 2020/1225 should be reduced by at least 35% or more when feasible, also by distinguishing between mandatory and voluntary fields.

On the other hand, the loan level information specified in reporting templates should not be required for highly granular and short-term underlying exposures (e.g. credit cards exposures).

The reporting template for private securitisation should be (i) significantly lighter than the one for the public securitisations and (ii) targeted exclusively at supervisory needs.

(v) Securitisation repository (Article 17)

 The main point concerns Article 17, whose amendments are aligned with those proposed in Article 7, which broadens certain reporting obligations to a repository also for private securitisations.

Due to the different nature of public securitisations, access to repository is granted to investors and potential investors in case of public securitisation, while, for private securitisations, the access is more restricted to protect the confidentiality of information.

Accordingly, immediate and free of charge access to repository should be ensured for the European Supervisory Authorities, the European Systemic Risk Board, the competent and resolution authorities and, upon request, the European Commission.

(vi) STS requirements (Articles 20, 26b, 26c, 26e)

With reference to SME securitisations fulfilling the STS criteria, the SR Amendments propose to deem them compliant with homogeneity requirement (Articles 20 points (8), (15) and Article 26 lett. b, point (8) of the Securitisation Regulation) when such securitisations concern at least the 70% of underlying exposure arising from SME loans, instead of the current 100%.

In addition, the eligibility criteria relating to credit protections provided by Article 26, lett. e), point (8) are amended to include an unfunded guarantee arising from an insurance or reinsurance undertaking. This guarantee shall also meet further conditions, such as robustness, solvency and diversification. The aforesaid amendment is intended to grant insurance and reinsurance undertakings access to the STS on-balance-sheet market (i.e. synthetic securitisations).

3. The CRR Amendments: key points.

The prudential framework currently in force has demonstrated that (i) the existing prudential securitisation requirements are insufficiently risk sensitive and (ii) the level of capital requirements that financial institutions shall comply with regarding their securitisation exposures are unduly high.

The CRR Amendments, essentially, concern two main pillars:

(i) The calibration of two main parameters that establish the level of non-neutrality  [5]: (a) the risk weight floor and (b) the (p) factor;

(ii) The rules governing significant risk transfer.

In respect of the aforesaid pillars the following changes are envisaged.

(a) The risk weight floors: a new – and more risk sensitive – approach [6]

The amendments propose an innovative approach, under which the risk weight floors for senior positions held in the context of securitisations are calibrated to the riskiness of the portfolio. As a result, the new model might be more risk sensitive, removing obstacles to the securitisations of low risk weights underlying exposures. In order to ensure the alignment with international standards and avoid excessively low risk weights, the risk weights should be, in any case, subject to a minimum threshold.

(b) The (p) factor amendments

The (p) factor, as parameter affecting the “non neutrality” of the securitisation capital requirements, increases the amount of capital to be held in relation to securitisation exposures.

Given that the (p) factor is currently unduly high and, as a result, entails overcapitalisation phenomena, targeted amendments should be introduced to, inter alia, ensure greater risk sensitivity, distinguishing between positions in STS and non-STS securitisations, originators/sponsors and investors positions, as well as senior and non-senior positions.

(c) SRT rules amendments

 The proposed amendments aim to solve some issues identified by EBA in its report on the significant risk transfer [7], such as limitation of the current SRT tests, profiles relating to technical aspects of securitisation structures and uncertainties and delays related to the supervisory authorities.

The EU Commission introduces a new principle-based approach test (the “PBA Test”), which replaces the current mechanical tests. To meet the PBA Test, the originator shall allocate no less than 50% of the underlying securitised positions to third parties. 

Furthermore, a new regulatory requirement prescribes for the originator to file a self-assessment with the competent authority, proving that significant risk transfer is achieved, including under stress scenarios.

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[1] “Verification requirements (Article 5(1) and Article 5(3), point (c)) are removed for investors whenever the sell-side party responsible for complying with the relevant sell-side provisions is established and supervised in the Union. In addition, the risk assessment in Article 5(3), point (a) and 5(3), point (b) of Regulation (EU) 2017/2402 is made more principled based by removing the detailed list of structural features that investors need to check and by clarifying in a recital that the due diligence assessment should be proportionate to the risk of the securitisation. The written procedures under Article 5(4) of Regulation (EU) 2017/2402 are also made more principled based by removing the detailed list of information in the second subparagraph of Article 5(4), point (a), of Regulation (EU) 2017/2402. Secondary market transactions are given an extra 15 days to document their due diligence” (EU Commission – “Proposal for amendments to the Securitisation Regulation”)

[2] “(a) the International Bank for Reconstruction and Development; (b) the International Finance Corporation; (c) the Inter-American Development Bank; (d) the Asian Development Bank; (e) the African Development Bank; (f) the Council of Europe Development Bank; (g) the Nordic Investment Bank; (h) the Caribbean Development Bank; (i) the European Bank for Reconstruction and Development; (j) the European Investment Bank; (k) the European Investment Fund; (l) the Multilateral Investment Guarantee Agency; (m) the International Finance Facility for Immunisation; (n) the Islamic Development Bank ;(o) the International Development Association; (p) the Asian Infrastructure Investment Bank” (Art. 117 2(2) CRR) (the “Listed Multilateral Development Banks”).

[3] “‘national promotional banks or institutions’ means legal entities carrying out financial activities on a professional basis which are given a mandate by a Member State or a Member State’s entity at central, regional or local level, to carry out development or promotional activities” (Art. 2, point (3), Reg. No. 2015/2017) (the “National Promotional Banks or Institutions”)

[4]  (a) central government and banks; (b) local authorities and public sector entities within the meaning of point (8) of Article 4(1) of the CRR of Member States; (c) institutions to which a 50 % risk weight or less is assigned under Part Three, Title II, Chapter 2 of the CRR; (d) the National Promotional Banks or Institutions and (e) the Listed Multilateral Development Banks

[5] “Non-neutrality”’ is a principle of the prudential framework that provides that the securitisations shall be subject to higher capital requirements than those applied to underlying exposures, where they are not securitised.

[6] The risk weight floors are minimum risk weights that credit institution shall apply to their securitisation exposures. The current rule indicates the following two fixed risk weight floors for senior positions: (a) 10% risk weight floor relating exposure to senior positions of STS securitisations and (b) 15% risk weight floor for exposure that refers to a senior position of non-STS securitisations.

[7] For further details please see EBA/Rep/2020/32.