The European Commission has today published a report on the functioning of the Securitisation Regulation. Securitisation is one of the main building blocks of the Capital Markets Union. It provides an additional funding source and frees up capacity on banks’ balance sheets, enabling them to lend more, thus contributing to a well-functioning financial system that efficiently finances the real economy. It acts as an important tool for capital, liquidity and risk management in banks. Furthermore, securitisation makes new assets accessible to investors, thus providing diversified opportunities for long-term investors. Today’s report relies on findings from a broad consultation of stakeholders and draws from input provided by the European Supervisory Authorities. The report concludes that the EU securitisation framework works well, even though dynamic market growth has not yet materialised. The Commission takes this as an indication that the Securitisation Regulation has contributed to achieving the 2017 legislation’s core objective of establishing an EU securitisation market that helps finance the economy without creating risks to financial stability. At the same time, it identifies a number of targeted improvements to the framework’s functioning, notably on proportionality of certain requirements, that will be pursued without changes to the Securitisation Regulation itself. In particular, the report provides guidance on certain areas of the Securitisation Regulation like the jurisdictional scope and invites the ESAs to revise technical standards dealing with transparency obligations. Finally, the report also includes an overview of the current and upcoming work on the prudential treatment of securitisation. The report is available here.
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