Strengthening the EU securitisation framework: ABBL shares key recommendations

Key areas of reform and ABBL’s position

1. Due diligence and risk retention

The ABBL supports the streamlining of due diligence obligations, particularly by removing duplicative checks for EU-regulated sell-side entities. Greater clarity around “full guarantees” and risk retention thresholds is welcomed—although we encourage further assessment of the current 15% threshold for first loss tranches.

We also propose:

• A standardised due diligence checklist for consistency
• More flexibility for low-risk transactions
• Clearer guidance to prevent fragmentation in application

2. Transparency and private/public securitisations

We support a reduction in reporting requirements, provided it’s based on materiality, not arbitrary cuts. However, expanding the definition of public securitisations to include all listed transactions could unintentionally deter issuance in the EU.

We recommend:

• Retaining issuer discretion in classifying public vs private securitisations
• Enhanced reporting for private securitisations, but limited to supervisory access

3. Supervisory framework

ABBL welcomes stronger coordination through a designated lead supervisor for cross-border transactions. However, this should not override the expertise of national authorities. The Joint Committee of the ESAs should play a coordinating – not dominating – role.

4. STS criteria and technical adjustments

Key proposals supported by the ABBL include:

• Relaxing the homogeneity rule for SME securitisations
• Expanding STS criteria to include unfunded protection providers
• Improving the treatment of synthetic securitisations in exceptional cases (e.g. fraud)
• Including servicers within the scope of the SECR to ensure consistent standards across actors

5. Capital and liquidity frameworks (CRR & LCR)

The ABBL strongly supports revisions that enhance risk sensitivity and reduce unjustified capital conservatism. Highlights include:

• A new “resilient” senior tranche category with capital relief
• Granular adjustments to risk weight floors and ‘p’ factors
• Extended eligibility for securitisations under LCR rules (including new asset classes)
• Removal of the 5-year maturity cap under HQLA

We also note the importance of transitional arrangements for legacy transactions to avoid disruptions.

Towards a balanced and effective framework

The ABBL views these reforms as a strategic opportunity to revitalise the securitisation market in Europe. By offering a more risk-sensitive approach, the proposed framework can foster innovation and support the growth of capital markets, provided that clarity and consistency in application are ensured.