European Parliament and Council reach agreement on securitisation framework review

On 21 October 2026, the European Parliament and the Council announced that they had reached agreement on the main parts of the review of the EU securitisation framework. The agreed compromise is a key step in the legislative process, which started with a European Commission (Commission) proposal in June 2025.

Background

The current EU securitisation framework consists of the Securitisation Regulation, which sets out a general framework for all securitisations in the EU and a specific framework for simple, transparent and standardised (STS) securitisations, as well as prudential requirements for securitisation positions in the Capital Requirements Regulation (CRR) and the Solvency II Delegated Regulation , and liquidity requirements in the Liquidity Coverage Requirement Delegated Regulation (LCR Delegated Regulation).

Although this framework has improved transparency and standardisation in the EU securitisation market, the Commission considers that the securitisation market has not yet reached its full potential and that barriers to issuance and investment remain too high. To address these issues and stimulate the EU securitisation market, the Commission published a draft legislative package consisting of the following separate proposals:

• Proposal for a Regulation amending the Securitisation Regulation laying down a general framework for securitisation and creating a specific framework for STS securitisation.
• Proposal for a Regulation amending the CRR as regards requirements for securitisation exposures.
• Proposal for a Delegated Regulation amending the LCR Delegated Regulation as regards the eligibility conditions for securitisations in the liquidity buffer of credit institutions.

According to the Commission, all of the above initiatives should be considered as a single package, meaning that the future success of the EU securitisation framework depends on all the proposed changes being implemented. That said, only the first two of the above proposals are subject to the ordinary legislative procedure. The Delegated Regulation, as an amendment to a Level 2 measure, is due to be formally adopted by the Commission, after which the co-legislators have two months to approve or object to it (without the ability to propose amendments).

A detailed overview of the proposed amendments is here.

Details of the political compromise

Although the text of the political compromise has not yet been published, press statements by both the European Parliament and Council indicate that their agreement includes the following aspects:

• Capital requirements for banks related to securitisations will be recalibrated on a risk-sensitive basis. As a consequence, low-risk securitisations will benefit from lower capital requirements, while higher requirements will be maintained for riskier securitisation positions. The European Parliament’s proposal to introduce a lower risk-weight floor of 5% for safer asset classes forms part of the final text.
• A new ‘resilient’ category of securitisations will be introduced in the framework. In addition, the STS securitisation label will be improved with the aim of enhancing risk sensitivity.
• The supervision of independent entities that verify STS compliance will be moved to EU level, with the European Securities and Markets Authority  becoming their supervisor. In addition, the final text contains a ‘comply or explain’ mechanism between Member State competent authorities and the European Banking Authority (EBA), which will allow the EBA to assess weaknesses in supervisory practices across the EU. A Joint Committee, led by the EBA, will publish an annual report on compliance with the STS criteria. Non-compliant transactions will be reported privately to national authorities for follow-up.
• A number of aspects of the review of the securitisation framework will reduce administrative burdens compared to the current rules, thereby lowering costs for issuers and investors.
• Investment limits for undertakings for collective investment in transferable securities will be raised, with the goal of stimulating growth in the market.
• The co-legislators agreed to define public and private securitisations. Public securitisations will be subject to full transparency requirements and regulatory scrutiny. Collateralised loan obligations will be subject to a distinct reporting template and access arrangements, but the reporting template should align closely with that used for public securitisations.
• Finally, the co-legislators agreed on targeted changes to the STS category of securitisations to support cross-border market integration, enable the participation of insurers and reinsurers in the synthetic securitisation market, and facilitate the use of securitisations to finance projects before they reach their operational phase.

Next steps

The next step is for the Council and the European Parliament to formally adopt the agreed legislative texts, before they can be signed and published in the Official Journal of the EU (OJ). The amendments to the securitisation framework will enter into force 20 days following OJ publication.