A consortium of leading trade associations (the “Trade Associations”) welcomes the opportunity to respond to the consultation of the European Commission (“EC”) on the functioning of the EU Securitisation Framework (the “Framework”).

The Trade Associations support the efforts of the EC to review and address holistically the different elements of the Framework which hinder market growth. This initiative is a very important and welcome step at a pivotal moment given the important role securitisation can play in contributing to the realisation of the Savings and Investments Union and vibrant European capital markets supporting the growth and competitiveness of the EU economy.

The regulatory and prudential challenges lie both on the demand and the supply side and, therefore, no single reform can ever provide an effective solution to the revival of the EU securitisation market. On the contrary, multiple, synchronised and targeted reforms are urgently needed to address the current regulatory impediments.  

These reforms include:

• Reform to Solvency II capital calibrations
• Reform to Article 5 due diligence requirements
• Adjustments to bank capital calculations for Internal Model and Standard Model banks
• Adjustments to LCR eligibility criteria and haircuts for securitisation for HQLA purposes
• Reform to Article 7 disclosure requirements
• Simplification of STS criteria

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