The European Supervisory Authorities (ESAs) through their Joint Committee have issued a forward-looking review of the Securitisation Regulation (SECR), evaluating its functioning and providing targeted recommendations for improvement. The report, which feeds directly into the European Commission’s upcoming legislative review, is an important signal of intent to simplify, harmonise, and ultimately revitalise the European securitisation market.
The review confirms that, while the Securitisation Regulation has succeeded in improving transparency and risk alignment, it has not yet delivered the scale or efficiency needed to support broader financial stability and real economy funding goals. Despite a strong regulatory foundation, Europe's securitisation market remains underutilised compared to global peers, a reality policymakers now appear eager to address.
A Clearer, simpler framework
One of the report’s most significant recommendations is the simplification of due diligence requirements for institutional investors. This proposed “substance over form” approach aims to reduce compliance burdens without diluting investor protections. In particular, it is expected to ease participation in both private and public ABS transactions.
The ESAs also propose greater flexibility in disclosure and transparency frameworks, especially for private transactions where rigid templates have been viewed as disproportionate. These changes would directly benefit both originators and investors, lowering transaction costs while preserving meaningful risk analysis.
Harmonised oversight and expanded eligibility
The report strongly encourages supervisory convergence, urging national authorities across the EU to apply the regulation consistently. Alternatively, the idea of a more centralised supervisory model is floated, especially relevant for cross-border transactions. This recommendation addresses long-standing market concerns about inconsistent national implementation, which has created uncertainty and discouraged activity in certain jurisdictions.
Additional proposed refinements include:
Allowing insurance companies to provide unfunded credit protection;
Clarifying key terms (e.g., for CLOs and synthetic transactions);
Expanding the definition of sponsor to include other regulated entities;
Aligning compliance obligations more closely with where securitisation parties are established.
Relevance for synthetic securitisation and Nordic markets
For synthetic securitisation, the report recognises the growing importance and market traction of on-balance sheet transactions. It supports the continued development of the STS framework for synthetic structures, particularly as a capital management tool under the evolving Basel 3.1 landscape. By refining the STS criteria and improving legal certainty, the ESAs aim to make these transactions both more attractive and more scalable.
This is particularly relevant for Nordic financial institutions, where supervisory caution toward SRTs including synthetic securitisation has at times limited market activity. The push for harmonised interpretation and proportional application across member states could open the door to greater Nordic participation, especially in areas such as commercial real estate and consumer credit, where capital efficiency remains paramount.
Outlook: A more accessible and effective market
In sum, the Joint Committee report signals a regulatory shift toward pragmatism, efficiency, and integration. By reducing barriers to entry, enhancing transparency, and ensuring a level playing field, the proposed reforms would strengthen the EU’s ABS market and unlock broader investor participation.
At Revel Partners, we view these developments as highly encouraging. We support the goal of a more proportionate and investor-friendly securitisation framework and believe that a more aligned Nordic application of these principles would mark a significant step forward for the regional market.
