Dr Thomas Papadogiannis-Varouchakis
On 4 December 2024, the European Commission’s Targeted consultation on the functioning of the EU securitisation framework, which had been running since early October 2024, was concluded.
In the context of this consultation, the Commission had invited industry participants and other stakeholders who are involved in the European securitisation market to respond to an online questionnaire about the EU securitisation regulatory framework and the effects of this framework on the market.
Through the responses it has received, the Commission seeks guidance regarding the appropriate way to regulate securitisation structures at the EU level and whether a recalibration of the existing regulatory framework is needed, so as to allow the EU securitisation market to grow and escape the subdued state it has been in, ever since the Global Financial Crisis of 2007-09.
The Commission is expected to provide an official response to the stakeholders’ answers and comments to its questionnaire through a report that will be published by summer 2025. If deemed appropriate, this report will be accompanied by a formal Commission legislative proposal.
This consultation marks the culmination of a years-long effort on behalf of the European securitisation industry to convince EU regulatory authorities to reconsider their stance towards securitisation and introduce a more favourable regulatory framework that will incentivise more market participants to engage in securitisation transactions. As the industry argues, a deeper and more liquid European securitisation market can be leveraged to help achieve the objectives of the EU’s Capital Markets Union, and provide additional funding to the European economy, further fostering the green and digital transition.
Notably, this push by the securitisation industry has recently been endorsed by various highly esteemed European political figures, such as Christian Noyer, Enrico Letta, and Mario Draghi who, throughout 2024, issued reports that called for a relaunch of European securitisation, as a means of strengthening the lending capacity of European banks, creating deeper capital markets, building the Capital Markets Union, and increasing the EU’s competitiveness.
Even though the Commission’s response to the stakeholders’ feedback cannot be prejudged, the broad range of issues that have been included in the questionnaire, spanning all crucial regulatory regimes that affect securitisation in the EU, such as the European Securitisation Regulation (SECR), and the prudential frameworks for banks and insurers, coupled with the momentum created by the endorsement of securitisation by political figures, have made the industry (cautiously) hopeful that, more than 15 years after the Global Financial Crisis, European securitisation will finally be rehabilitated in the eyes of EU regulatory authorities.