EU Securitisation Review: Progress made at second trilogue update

The second trilogue on the EU Securitisation Review was held on 7 July in Strasbourg, bringing together the European Parliament, the Council and the European Commission.  

The Irish Presidency confirmed that it remained committed to advancing the securitisation trilogues with a view to closing the file during its term (ending 31 December 2026). 

Key takeaways from the second trilogue include: 

Areas of progress 

• Due diligence & risk retention waivers: The co-legislators agreed to (i) lower the guarantee  threshold to 10% for STS securitisations (15% for non-STS) subject to broader agreement on the waivers, (ii) remove credit institutions from the list of eligible guarantors and (iii) retain the risk retention waiver together with existing Council safeguards. The due diligence waiver remains under technical discussion. 
  
  
• Unfunded credit protection (UFCP): There is agreement in principle to lower the solo-level insurer threshold from €15bn to €10bn. The ESRB macroprudential oversight mandate was also provisionally agreed.  However, no political agreement was reached regarding the issue of credit quality in UFCP which remains unsettled but the Commission was tasked with developing a non-paper proposing solutions to avoid cliff-edge-effects, such as grace periods, contract transfers and the posting of further collateral.  

Issues still open 

• Sanctions on institutional investors: No political agreement was reached. The Commission has been tasked with analysing existing sectoral sanctioning regimes to inform future discussions on a proportionate approach under the Securitisation Regulation. 
  
  
• UCITS single-issuer investment limits: The EP favours a 20% limit; the Council mandate sits at 50%. All parties agreed that the definition of 'public securitisation' must be settled first before calibrating any threshold. 
  
  
• The devil will be in the detail: As expected the sole purpose test (Sec. Reg. Article 6(1)), Net Stable Funding Factor (NSFR) (CRR Article 428p(3a)) and Article 428ag(j)) and the Credit Conversion Factors (CCF) (CRR Article 248(1)) have been delegated to the technical level rather than addressed in the Level 1 text. 
  
  
• Supervision & prudential calibration: Discussions have also been delegated to technical level, with the Commission expected to prepare non-papers on the EP's proposals ahead of future trilogues. 

The next trilogue is scheduled for 29 September 2026, when discussions on the remaining open issues are expected to continue. 

While a number of important issues remain under negotiation, the areas discussed during the second trilogue could have significant implications for issuers, investors, credit institutions and insurers active in the European securitisation market. The eventual framework will influence the attractiveness of securitisation as a funding tool, investor participation and the efficiency of capital deployment across the EU. 

Market participants should continue to monitor these developments closely - the outcomes on prudential calibration, UCITS limits and other key changes to the framework will be pivotal in determining whether the EU can unlock a deeper, more liquid securitisation market to support its competitiveness and growth agenda.