Executive Summary
In June 2025, the European Commission unveiled a package of proposed amendments to the EU’s securitisation rules aimed at reviving the securitisation market while maintaining financial stability. These reforms respond to findings that the 2019 framework – although making the market safer – was overly restrictive and hindered securitisation activity. The proposals seek to strike a better balance by eliminating undue issuance and investment barriers and encouraging banks and investors to engage more in securitisation, thereby freeing up capital for new lending to households and businesses. Overall objectives include reducing unnecessary operational costs for market participants while enhancing risk-sensitivity in prudential requirements, all without compromising investor protection or financial stability. Key focus areas of the reform are: simplifying transparency and disclosure obligations, introducing a tailored regime for private (non-public) securitisations, clarifying the Significant Risk Transfer (SRT) process, refining the STS (simple, transparent, standardised) criteria (especially for SME loans and insurer involvement), and overhauling capital treatment of securitisation exposures.
Simplified Transparency and Disclosure Requirements
One cornerstone of the proposals is streamlining the transparency and reporting regime to cut excessive operational burden on issuers and investors. The Commission has acknowledged that current disclosure templates are overly complex and costly, especially compared to other financing instruments. To address this, it recommends simplifying the standard reporting templates and significantly reducing the data fields that must be reported. In fact, the European Banking Authority (in coordination with other European Supervisory Authorities) will be tasked with revamping the templates with a target of cutting required fields by at least 35%. This means many data points will be dropped, and the revised templates will likely distinguish between mandatory versus optional information. Another practical change is that certain highly granular, short-term assets (like credit card receivables or small consumer loans) would no longer require loan-level reporting, acknowledging that detailed data on thousands of small, short-term exposures may not be useful and is burdensome to provide. By simplifying and trimming down these disclosures, the framework will make it easier for investors to fulfill due diligence obligations efficiently and reduce the reporting load on securitisation issuers. In short, transparency standards will be maintained but with a much more proportionate approach, lowering compliance costs while still ensuring investors get the key information they need in a timely manner.
New Definition of Private Securitisations and Lightened Reporting
A significant reform is the introduction of explicit definitions for public vs. private securitisations, with a lightened reporting regime for private deals. Under the proposal, a public securitisation is essentially any securitisation that is offered to the public, has a prospectus, or is admitted to trading on a regulated market. Conversely, a private securitisation is defined as one with no prospectus, not listed or traded on markets, and where transaction terms are negotiated privately (e.g. bilateral deals with a small number of sophisticated investors). This formal distinction matters because private securitisations currently faced almost the same disclosure requirements as public deals, even though they involve only select institutional parties. The Commission’s amendments propose that bespoke private transactions will use a separate, simplified reporting template that is much lighter than the public one and focused only on supervisors’ needs. In other words, these smaller club deals will no longer have to fill in the extensive public templates; instead, they will report a pared-down set of information sufficient for regulatory oversight. Importantly, to improve supervisory visibility into the private market, even private securitisations will be required to submit their information to securitisation repositories (a change from the current framework where private deals could avoid repository filing). However, the scope of data reported for private deals will be limited to what supervisors require, protecting the confidentiality of deal specifics and avoiding needless burden. This reform is expected to ease compliance costs for originators in private transactions and increase transparency for regulators, without overwhelming investors with data they don’t need (since in a private deal investors typically already have access to relevant information). By lightening the reporting for private securitisations, the Commission aims to facilitate more such transactions (which are often important for tailored risk transfer, such as bank balance-sheet synthetic trades) while still maintaining insight into market activity.
Principle-Based Significant Risk Transfer (SRT) Framework
Another pillar of the proposals is the overhaul of the Significant Risk Transfer (SRT) framework for banks. SRT is the process by which a bank securitising its loans demonstrates to supervisors that it has transferred enough credit risk to third-party investors to justify capital relief. Under the current rules, SRT determinations have relied on mechanistic tests (two numerical thresholds) and detailed prescriptive criteria, which industry feedback has found cumbersome and sometimes ill-suited to capture genuine risk transfer. The Commission is now moving toward a principle-based SRT approach. In practice, this means the two rigid quantitative tests will be replaced by a broader principles-based test (PBA test) that focuses on qualitative indicators of effective risk transfer rather than just hard numbers. The idea is to prevent gaming the system via structuring tricks and instead allow a more holistic, case-by-case assessment of whether a transaction truly shifts risk away from the originator. Alongside this, the proposal calls for clear high-level principles to guide supervisors’ SRT assessments across the EU, to ensure consistency. The EBA will be empowered to develop these harmonised SRT assessment principles via regulatory technical standards. Furthermore, the reform envisions a fast-track supervisory process for qualifying securitisations – essentially a streamlined approval pathway for transactions that meet certain predefined high-quality criteria, enabling quicker recognition of SRT in straightforward cases. Overall, these changes will make the SRT approval process clearer, more robust and less prescriptive. Banks seeking capital relief through securitisation should benefit from greater predictability and transparency in how their deals will be evaluated, while supervisors gain a consistent framework to identify and prevent any structuring that undermines true risk transfer. By improving the SRT regime in this principle-based way, the reforms aim to encourage more responsible securitisation for balance-sheet management – giving banks confidence that well-structured transactions will obtain capital relief – without compromising on prudential safeguards.
Refinements to STS Criteria: SME Pools and Insurer Participation
The proposals include targeted adjustments to the criteria for Simple, Transparent and Standardised (STS) securitisations, with a focus on expanding STS to more asset types and investors while keeping its quality standards. The STS label, introduced in 2019, allows qualifying securitisations to enjoy more favorable regulatory treatment, but some criteria have proven too rigid in practice. One key change is designed to facilitate securitisation of SME loans and cross-border portfolios. Currently, when a securitisation pool includes exposures from multiple EU countries, the STS rules require the pool to be homogeneous (of similar risk characteristics) and, in some cases, comprised entirely of one asset type (e.g. 100% SME loans) if it spans different jurisdictions. The Commission proposes to loosen the homogeneity requirement for SME securitisations, specifying that a pool will qualify as homogeneous as long as at least 70% of the underlying exposures are SME loans down from the strict 100% under current rules. This lower threshold recognizes the benefit of mixing some non-SME assets for diversification or practical reasons, and ensures that mixed pools with a strong SME focus can still qualify for STS. The change is expected to promote more securitisations of SME loans, supporting small businesses’ access to credit by making it easier for banks to package SME loans into STS transactions.
Another important refinement is to broaden investor participation in STS – specifically by making it easier for insurance companies to invest in or provide guarantees to STS securitisations. Under current STS on-balance-sheet synthetic securitisation rules, the credit protection for the securitised portfolio generally must be fully cash collateralised, which effectively bars many insurers and reinsurers from acting as protection sellers, since they typically provide unfunded guarantees rather than upfront cash collateral. The Commission proposes to amend the STS collateralisation requirement to allow insurers and reinsurers to participate, provided they meet strict conditions on solvency, risk diversification, and financial soundness. This change recognizes that certain insurers can be reliable long-term partners in securitisations and aligns with the goal of channeling more institutional money (like insurance assets) into the securitisation market. To maintain STS integrity, only insurers meeting high prudential standards would qualify, ensuring that the risk to the originating bank is adequately covered even without full collateral. Apart from these two major changes (SME pool flexibility and insurer access), the Commission is also making various technical adjustments to streamline the STS criteria application (e.g. clarifying some requirements, removing minor impediments) without changing the substance of the STS principles. Collectively, these adjustments aim to make the STS framework more inclusive and practical – encouraging securitisations that support real economy lending (like to SMEs) and allowing a wider range of investors (like insurance firms) to participate – all while preserving the high standards that STS designation entails.
More Risk-Sensitive Capital Treatment of Securitisation Positions
Perhaps the most impactful changes are those to the prudential capital treatment for securitisation exposures held by banks. The Commission is introducing a more risk-sensitive approach to calculating capital requirements, replacing some blunt risk weight calibrations with more nuanced ones. Under the current Capital Requirements Regulation (CRR) rules, banks face fixed minimum risk weight floors for securitisation tranches – for example, a senior tranche of an STS deal cannot carry a risk weight lower than 10%, and for a non-STS deal the floor is 15%, regardless of how safe the underlying assets are. This one-size-fits-all floor has been criticized for being insufficiently sensitive to differences in risk. The proposal will introduce a formula-based, dynamic risk weight floor for senior positions so that the minimum capital charge is tied to the actual riskiness of the underlying loan pool. In practice, if the securitised portfolio is very low-risk e.g. high-quality mortgages or loans with low historical losses, the new formula can yield a lower floor potentially even below 10%, with an absolute minimum set around 5% for the safest STS cases, whereas riskier pools would result in higher minimums. This change significantly increases the risk-sensitivity of capital requirements: safer securitisations will no longer be arbitrarily penalized with the same floor as much riskier ones. To prevent any extreme outcomes, the formula-based floor will still be bounded by a minimum level and a cap for prudence, but overall it introduces a gradation that better reflects actual credit risk.
In addition, the proposals adjust a key calibration parameter known as the p-factor in the securitisation capital formulas. The p factor determines how quickly capital requirements drop as a tranche becomes more senior. The current framework applied a relatively conservative p factor effectively reducing capital benefits, but the Commission plans to lower this parameter (for example, halving it for STS securitisations) to reduce excessive conservatism in capital calculations. By lowering the p-factor for STS exposures and certain high-quality positions, the capital treatment will align more closely with the true risk and historical loss data of these tranches, rather than forcing banks to hold disproportionately high capital.
Crucially, the reform also introduces the notion of resilient securitisation positions that merit special capital relief. If a securitisation structure includes features that robustly mitigate risk for the senior tranche (e.g. substantial credit enhancement, trigger mechanisms, etc.), and meets a set of strict safeguards, then that senior tranche is deemed exceptionally well-protected and resilient and qualifies for significant capital reduction. These safeguards and criteria ensure that only truly low-risk senior exposures get this preferential treatment, maintaining prudence. Overall, the capital rule changes are expected to meaningfully reduce capital requirements for less risky, robust and high-quality securitisation exposures – especially senior tranches of STS or otherwise strong transactions – while avoiding any undercapitalisation of riskier positions. The result should be a more balanced approach: transactions with sound structures and safe asset pools become more economically attractive (due to lower capital costs), which incentivises banks to engage in securitisation for good quality assets, whereas high-risk transactions still carry appropriately high capital charges. Importantly, these adjustments are designed to maintain alignment with international standards and prudential soundness. Securitisation exposures will remain subject to Basel-consistent capital levels, and since securitisations are only a small fraction of banks’ overall risk-weighted assets, these targeted tweaks are not expected to weaken broader bank resilience. Rather, they fine-tune the framework to remove unwarranted penalisations, bringing securitisation capital treatment more in line with the actual risks.
Accuria’s Personal Commentary
We welcome the Commission’s efforts to reduce unnecessary red tape and compliance burdens in the securitisation framework. Such steps are crucial to revitalising the securitisation market, facilitating new investments, and improving funding conditions across Europe.
However, we caution that some proposed simplifications—especially those relating to transparency and public disclosure—may risk undermining market efficiency. Robust, transparent markets depend critically on the availability of detailed, granular data. Europe’s private debt and commercial real estate loan markets already face significant challenges due to the limited public availability of loan-level performance data. Unlike Europe, the United States benefits from extensive public datasets provided by entities such as business development companies for private debt and comprehensive loan-level reporting in commercial mortgage-backed securities (CMBS). These rich dataset substantially enhance market efficiency and investor confidence, an advantage currently lacking in Europe.
Collateralised Loan Obligations (CLOs) illustrate another transparency challenge. Despite CLOs typically being privately structured on both sides of the Atlantic, they are often broadly marketed and placed with multiple investors. This raises important questions about the clarity of definitions distinguishing between public and private transactions.
Similarly, Significant Risk Transfer (SRT) transactions may be broadly marketed, allowing investors to engage actively and influence portfolio composition and deal structures. A more objective criterion—such as a threshold based on investor outreach (e.g., marketing a transaction to more than five investors)—could provide clearer guidance on what constitutes a public securitisation than the currently proposed take-it-or-leave-it standard. Such clarity would ensure that broadly marketed transactions provide the appropriate level of market transparency, consistent with their market reach.
In summary, while the proposed reforms rightly prioritise the reduction of unnecessary regulatory complexity, it is essential to safeguard transparency. The right balance between reducing red tape and maintaining high-quality, accessible market data is critical for the long-term health, efficiency, and stability of Europe’s securitisation markets.
Sources: European Commission proposal documents and Q&A on the Securitisation Regulation and CRR reforms, European Parliament briefing.
AI Agents: The article was written with the assistence of the Accuria AI agent for document analysis.
