Andrew Traynor
Partner
Ireland
The trilogue on the EU securitisation package has successfully concluded under the Irish Presidency of the Council of the EU with political agreement being reached between the Council and the European Parliament on 21 October 2026 to revise and simplify the EU's securitisation regime - a remarkable feat given how far apart the co-legislators were on some of the issues at the outset.
The political agreement reached this week marks a significant positive development for the EU securitisation market. It includes more risk-sensitive capital treatment, a strengthened STS framework, reduced administrative requirements and other measures to broaden institutional investor participation which should all help create a more attractive environment for a variety of securitisation activity in Europe.
The deal strikes a good balance between ambition and financial stability, making the framework more effective and future-proof.
The potential benefits for issuers are particularly meaningful. Risk-weight floors for senior STS positions could fall to 5–7% where the new “resilient” criteria are met, improving the economics of securitisation as a capital and balance sheet management tool. Combined with a lighter administrative burden and a broader investor base as a result of increases to the single-issuer threshold for UCITS, the reforms have the potential to support increased issuance and market activity across the entire European securitisation market. Public and private securitisations will be defined in the regulation itself with a simplified reporting template for private deals. It seems that CLOs will be subject to a distinct streamlined reporting template and access arrangements. This is a profound change as private securitisations were historically excluded from the requirement to use a repository. Confidentiality issues around private securitisations will be respected so that only investors and regulators will have access to the information.
While the agreement has some positive developments it still falls short of the transformative reform that many market participants had been hoping for. There is a missed opportunity though by not embracing a more principle-based approach regarding due diligence requirements. A full sanctions regime appears to have been dropped and Member States will instead determine the level of sanctions for breaches of due diligence rules taking existing sectoral sanctions into account.
However, importantly, the political narrative around securitisation continues to evolve in a constructive way, moving away from viewing the market primarily through a prudential lens with the reforms expressly recognising securitisation's role in supporting the real economy by freeing up bank capital, supporting greater lending to households, SMEs and infrastructure and defence projects which will ultimately help advance the EU’s broader competitiveness objectives.
Overall though, it is a very welcome development and a major win for the broader Savings and Investment Union initiative.
