In Practice: EU Proposed Securitisation Disclosure Reforms: Is the Remedy Worse Than the Affliction?
The European Commission acknowledged, in its 2024 targeted consultation on the functioning of the EU securitisation framework, that the current transparency regime in Article 7 of the EU Securitisation Regulation (EUSR) is widely seen as duplicative, overly prescriptive, and insufficiently adapted to the needs of investors.
The European Supervisory Authorities (ESAs) were tasked with providing recommendations on streamlining and simplifying securitisation disclosure requirements, potentially forming part of the Commission’s wider reforms to the EU securitisation framework. In response, the Joint Committee of ESAs made several recommendations on securitisation disclosure in its report on the functioning of the EUSR published at the end of March 2025 (the JC Report). In addition, the European Securities and Markets Authority (ESMA) proposed a new, simplified disclosure template for certain private securitisations. These recommendations have informed the Commission’s proposed draft amending regulation to be published on or about the date of this article.
Besides introducing a dedicated, simplified template for private transactions, this initiative aims to reduce complexity and compliance costs. Among other things, it aims to streamline reporting for public securitisations by reducing the volume of data fields to be completed and replacing detailed loan-by-loan reporting with aggregate-level data for certain asset classes. We expect the Commission’s proposal to require at least a 35% reduction in the number of data fields for public securitisations. However, the Commission’s intention to expand the definition of “public” securitisation and impose mandatory reporting of private transaction data to securitisation repositories could complicate matters. The new private reporting template might add an extra layer of compliance costs, potentially negating the anticipated simplification.
A new reporting template for private securitisations: simplification or complication?
The proposed template for private securitisations would replace existing asset-specific loan-level data reporting templates, although these would still apply to public securitisations. The proposal introduces “European private securitisations”, defined as private securitisations in which all sell-side entities are EU-established. This definition excludes deals with non-EU entities from using the new simplified template, potentially hindering EU institutional investors from accessing non-EU securitisations since non-EU issuers find the templated disclosure particularly burdensome and do not always offer it — a key motivation for a simplified template.
The proposed template for private securitisations would be asset-agnostic and apply to all types of transactions, with distinctions for asset-backed commercial paper (ABCP) programmes and non-ABCP securitisations. While its primary aim is to enable supervisory authorities to access the necessary data for effective market monitoring, the proposal also contemplates providing investors with a scaled back set of templated asset data, and the existing investor report information templates (which, among other things, provide information about the securitisation’s performance) would continue to apply.
The proposed template would replace loan-by-loan disclosures with portfolio-level data in the style of stratification tables with high-level data on key metrics such as jurisdictional distributions and key exposure classifications. For synthetic securitisations, the proposed template would detail features of the transaction including attachment and detachment points, the protection provider name, whether it is funded or unfunded, and more.
Significant event information, currently found in a separate template, is incorporated into the proposed template. This includes material breaches of obligations, changes in structural features, shifts in risk characteristics, and loss of STS status. Under the current system, the inside information and significant event information template does not apply to private transactions, meaning the new template would require new data points not currently provided.
The proposed template and existing investor report templates would be required monthly for ABCP transactions and quarterly for non-ABCP transactions. Additionally, private reporting entities would need to complete the template on an ad hoc basis following a significant event, in addition to the regular monthly/quarterly reporting.
Unhelpfully, ESMA stated in its report that private sell-side entities could be responsible for providing the full suite of public reporting templates “upon request” from its supervisor, which means such entities would need to collect all of the existing required information and maintain systems to prepare full “public” templates, should the need arise. Also, sell-side entities in a European private securitisation would need to be prepared to change over to “public” reporting should a non-EU entity be added to the transaction at a later stage.
The JC Report
The JC Report aims to assist the Commission in assessing the EUSR’s effectiveness in achieving its policy objectives and recommend further changes to the EUSR. The report’s recommendations are extensive and include proposals to reform the EUSR’s transparency provisions, such as:
- reducing the number of data fields and removing duplication or inconsistencies (currently the number of fields varies widely, ranging from 181 fields for commercial real estate to 47 for credit card transactions);
- streamlining existing templates for public transactions by focusing on common information that covers all asset and transaction types, whilst setting up an “asset-class section” that includes asset-class specific information;
- amending Article 7 of the EUSR to clarify that the level of granularity in information should be tailored to the characteristics of each asset class, which would mean that existing templates (which would be used for public transactions if the private template is adopted) would migrate from loan-level to aggregated data reporting, but only for certain asset classes that are revolving in nature and highly granular, such as credit card receivables; and
- introducing exemptions for certain intragroup transactions from the obligation to report to a securitisation repository, except for intragroup transactions between a bank and an insurer or reinsurer.
Less helpfully, some changes could add to the regulatory burden, such as requiring stratified data for all public securitisations (including those asset classes for which loan-level data is required); imposing reporting of private transaction data to securitisation repositories; and specifying in the EUSR a list of common underlying documents to be provided for all transactions, with documents specific to individual market segments being set out in a revised set of “level 2” disclosure technical standards.
Redefining “public” securitisations
In its proposed amending regulation, the Commission is expected to redefine “public” and “private” securitisations. The definition of “public” securitisations could be amended to include transactions involving notes traded on EU-regulated markets, multilateral trading facilities (MTFs), organised trading facilities or other EU trading venues, or when securities are marketed broadly with non-negotiable terms on a “take-it-or-leave-it” basis. Even if a securitisation was held by one investor only but listed on an MTF, it would be considered “public”. However, the line between private and public reporting could become less pronounced (especially for private transactions with a non-EU entity) if private transaction data becomes subject to securitisation repository data verification and completeness procedures.
Next steps
Under the Commission’s wider proposals, the European Banking Authority (EBA) may be holding the pen for disclosure-related technical standards instead of ESMA. This raises the question whether ESMA’s proposed template for private securitisations will be adopted as drafted. In any case, it is important that the definitions of private and public securitisations are finalised before a new suite of disclosure templates is implemented so that market participants know exactly which templates should be used and do not need to change their reporting systems unnecessarily.
While the EU’s proposed securitisation disclosure reforms aim to streamline reporting, they may inadvertently create new complexities and challenges for sell-side entities. In addition, the proposals fail to address one of the key concerns of the market: the unlevel playing field in which EU investors cannot invest in securitisations originated by non-EU originators who are not subject to the EUSR disclosure regime and do not choose to comply with it. As the market braces for these changes, one cannot help but wonder whether the remedy may be worse than the problems it aims to address.