EU Securitisation Framework – Council Position Finalised

The European Commission published a formal legislative proposal on 17 June 2025 in connection with the current EU securitisation framework (the "Securitisation Legislative Proposal") and submitted it to the Council of the EU and the European Parliament for approval pursuant to the EU's ordinary legislative procedure. The Securitisation Legislative Proposal proposes amendments to Regulation EU 2017/2402 (the "EU Securitisation Regulation") and to the prudential legislation which forms part of the current EU securitisation framework. You can read more about the Securitisation Legislative Proposal here.

On 19 December 2025, the Council of the EU announced and published its agreed position (the "Council Position") on the Securitisation Legislative Proposal. The Council Position essentially constitutes the negotiating position of the Council of the EU prior to entering into "trilogue" discussions with the European Parliament and the European Commission, which are likely to take place later this year. The Council Position contains some suggested amendments to the Securitisation Legislative Proposal which should be positive from the perspective of market participants in securitisation transactions.

Who should be interested in the Securitisation Legislative Proposal?

The Securitisation Legislative Proposal is of interest to a wide group of stakeholders, including the following:

• sponsors and arrangers of securitisation transactions;
• issuers and originators of securitisation transactions; and
• institutional and retail investors in securitisation transactions.

What does the Council Position provide for?

The Council Position is mostly consistent with and aligned to the European Commission's Securitisation Legislative Proposal. However, it also contains some suggested amendments to the Securitisation Legislative Proposal, including the following:

• EU Securitisation Regulation – Definition of Public Securitisation: The Council Position fully removes the expanded definition of 'public securitisation' proposed under the European Commission's Securitisation Legislative Proposal. That expanded definition would have captured, for example, transactions where debt instruments were listed on an EU trading venue for technical reasons – such as tax efficiency or specific investor requirements – rather than to promote secondary market liquidity. By remaining 'private securitisations', these transactions would benefit from lighter disclosure requirements and additional confidentiality safeguards.
• EU Securitisation Regulation – Sanctions: The Council Position reverses the European Commission's proposed extension of the existing administrative sanctions regime under the EU Securitisation Regulation to investors who breach their due diligence obligations. This means that investors would continue to face sanctions under their applicable sectoral rules only.
• EU Securitisation Regulation – Third Country Securitisations: The Council Position effectively requires that non-EU issuers of securitisation transactions to EU investors need to meet "substantively equivalent" disclosure requirements to those applicable to EU issuers. However, it also removes the requirement for EU investors to verify compliance with the disclosure templates mandated by the EU Securitisation Regulation by non-EU sell side parties issuing to EU investors. This represents an attempt to find a compromise approach on a heavily debated issue, which has ongoing practical impacts on global securitisation markets.
• Prudential Legislation – Definition of Senior: The Council Position reverses the changes to the definition of "senior" set out in the European Commission's Securitisation Legislative Proposal. The Securitisation Legislative Proposal proposes adding a time-varying element to the definition by requiring a minimum attachment point moving with losses of underlying assets. However, the Council Position would ensure that the seniority test will remain static over the life of a securitisation transaction.
• UCITS – Investment Caps: The Council Position raises the investment limit for undertakings for collective investment in transferable securities (UCITS) by allowing them to acquire up to 50% of securities in a 'public securitisation', up from the current 10% cap on all securitisation transactions. This proposed amendment was not contemplated by the European Commission in the Securitisation Legislative Proposal.

What about the European Parliament?

On 11 December 2025, the Rapporteur of the European Parliament's Committee on Economic and Monetary Affairs (the "ECON Committee") published draft reports (here and here) on the Securitisation Legislative Proposal. This effectively amounts to a preliminary negotiating position of the European Parliament.

This preliminary position is expected to evolve and be amended through exchanges of views and discussions in the ECON Committee. The current expectation is that the ECON Committee will likely vote on a final report in May 2026 and then we will know the European Parliament's agreed position on the Securitisation Legislative Proposal.

What happens then?

Later this year and once the European Parliament's agreed position has been finalised, the European Commission, the Council of the EU and the European Parliament will enter "trilogue" discussions – where all three bodies will debate and agree a final compromise position.

While a definitive timeline is still evolving, it is unlikely that the amendments to the current EU securitisation framework will be in force prior to mid-2027. Until the Securitisation Legislative Proposal is approved by the EU and enters into force, the EU Securitisation Regulation as currently in force remains the law.

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