Securitisation and capital requirements

29-01-2016

As part of its ambition to create a Capital Markets Union, the European Commission wants to revive the securitisation market in the EU, in order to offer new financing tools and ease credit provision, especially for small and medium-sized enterprises. Its 'securitisation initiative', set out in a proposed regulation on 30 September 2015, would establish a new framework for 'simple, transparent, and standardised' (STS) securitisations. This new initiative also has implications for the overall prudential framework for credit institutions and investment firms, therefore the Commission proposed to amend the Capital Requirements Regulation (EU) No 575/2013 accordingly. The proposed amendments would adjust risk retention profiles to reflect properly the specific features of STS securitisations. The most significant changes are: a new hierarchy of risk calculation methods and lower capital requirements for STS. Although consideration of the two proposals is still at an early stage in Parliament, the Council agreed a general approach on both in early December. See also our briefing on the related proposal: 2015/0226(COD). A more recent edition of this document is available. Find it by searching by the document title at this address: http://www.europarl.europa.eu/thinktank/en/home.html

As part of its ambition to create a Capital Markets Union, the European Commission wants to revive the securitisation market in the EU, in order to offer new financing tools and ease credit provision, especially for small and medium-sized enterprises. Its 'securitisation initiative', set out in a proposed regulation on 30 September 2015, would establish a new framework for 'simple, transparent, and standardised' (STS) securitisations. This new initiative also has implications for the overall prudential framework for credit institutions and investment firms, therefore the Commission proposed to amend the Capital Requirements Regulation (EU) No 575/2013 accordingly. The proposed amendments would adjust risk retention profiles to reflect properly the specific features of STS securitisations. The most significant changes are: a new hierarchy of risk calculation methods and lower capital requirements for STS. Although consideration of the two proposals is still at an early stage in Parliament, the Council agreed a general approach on both in early December. See also our briefing on the related proposal: 2015/0226(COD). A more recent edition of this document is available. Find it by searching by the document title at this address: http://www.europarl.europa.eu/thinktank/en/home.html