The EU is facing growing pressure from banks to follow through on proposals to provide more regulatory support for a revival of the European securitisation market. The European Central Bank (ECB) and Bank of England published two joint papers on the topic in the first half of 2014. These were followed by a paper from the European Banking Authority (EBA) in October 2014, which made the case for establishing “simple, standardised and transparent” (SST) securitisations that might merit more favourable regulatory treatment.
The SST concept was then adopted in the European Commission (EC) green (consultation) paper in February 2015 on proposals to establish a capital markets union to counteract the fragmentation of European financing conditions, one of EC president Jean-Claude Juncker’s centre-piece policies. Other elements include greater harmonisation of tax, insolvency and securities laws, all of which have been long discussed in the EU without any substantive agreement to date.
