Analytics, EU – Baltic States, Financial Services, Modern EU, Security

Securitisation is the process where a financial instrument is created, typically by a lender (for example, a bank), by pooling assets (e.g. SME-loans, house- or car-loans) for investors to complete a purchase. This facilitates access to a greater range of investors, thereby increasing liquidity and freeing up capital from the banks for new lending.

The EU wanted a regulatory framework for securitisation which is simple, transparent, standardised and subject to adequate supervisory control. According to the Commission's estimates, if EU securitisation issuance was built up again to pre-crisis average, it would generate between €100-150 bn in additional funding for the member states’ economy.

More on securities market in: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-markets/securities-markets_en#150930

In September 2015 the European Commission proposed new rules on simple, transparent and standardised securitisation as part of the CMU Action Plan. According to the Commission's estimates, the EU securitisation issuance (compared to the pre-crisis period), it would generate about €150 billion in additional funding for the economy.

More on the CMU Action Plan in Commission press release at: http://europa.eu/rapid/press-release_IP-15-5731_en.htm.  

The new harmonised securitisation rules (most of them apply from January 2019), are an important building block of the European Capital Markets Union, CMU. They are already providing additional funding sources for companies, strengthening banks’ ability to support the economy and spread risks across market participants, while avoiding the excesses that led to the financial crisis.

Drawing heavily on the work of the international supervisory community, new EU securitisation regulation creates common rules and sets the criteria for simple, transparent and standardised (STS) securitisation in the EU states. These are a new class of high-quality securitisation which will make it easier to issue and invest in securitisations in the EU states and help ensure financial stability and investor protection.

More in: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-markets/securities-markets/securitisation_en#new-rules-for-simple-and-transparent-securitisation