COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down common rules on securitisation and creating a European framework for simple and transparent securitisation and amending Directives 2009/65/EC, 2009/138/EC, 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 and Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms
Date: 2015-09-30
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU law, banking, credit, financial institution, financial market, investment, investment company, monetary crisis

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   EUROPEAN COMMISSION  Brussels, 30.9.2015  SWD(2015) 186 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a  REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  laying down common rules on securitisation and creating a European framework for simple and transparent securitisation and amending Directives 2009/65/EC, 2009/138/EC, 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012   and   Proposal for a  REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms {COM(2015) 472 final} {COM(2015) 473 final} {SWD(2015) 185 final}  
 
 
Impact assessment on the Proposal for a Regulation on Securitisation 

Executive Summary Sheet 

A. Need for action 

Why? What is the problem being addressed?  
Before the crisis the securitisation market was a growing channel of funding to the European economy. 
This  market  performed  well  during  the  crisis,  generating  negligible  losses.  However,  its  post-crisis 
reputation  was  severely  tarnished  by  practices  and  events  taking  place  elsewhere,  mainly  in  the  US. 
This  stigma  is  reflected  in  investors'  perception  of  EU  securitisation's  riskiness  as  well  as  in  its 
regulatory treatment, which has been calibrated mainly on losses in US markets. Since these have been 
a multiple of EU securitisation losses, the latter are disadvantaged by the regulatory treatment.  
As  a  consequence  of  the  stigma  and  the  regulatory  treatment,  the  EU  securitisation  market  is  now 
stalled. A financing channel for the EU economy is thus lost. Without securitisation, banks' ability to 
sell assets is constrained. As a consequence, the current need for deleveraging often imposes banks to 
shrink  their  balance  sheets  by  reducing  credit  provision.  In  the  European  context,  where  80%  of 
financial  intermediation  takes  place  through  banks,  the  implications  for  growth  are  substantial.  The 
creditless recovery is protracted, slowing growth and job creation.   
What is this initiative expected to achieve?  
The  general  objective  of  the  initiative  is  to  revive  a  safe  securitisation  market  that  will  improve  the 
financing of the EU economy, weakening the link between banks deleverage and credit tightening in 
the short run and creating a more balanced and stable funding structure of the EU economy in the long 
run.  Specifically,  this  is  to  be  achieved  differentiating  simple,  transparent  and  standardised 
securitisation (STS) products that can provide a sustainable funding channel for the EU economy from 
more  opaque  and  complex  ones.  Secondly,  the  standardisation  of  processes  and  practises  in 
securitisation  markets  as  well  as  tackling  regulatory  inconsistencies  will  be  pursued.  The  degree  of 
achievement if these objectives will be measured against the difference in price and issued quantities of 
STS versus non-STS products. 
What is the value added of action at the EU level?  
Securitisation products are part of EU financial markets which are open and integrated. Securitisation 
links different financial institutions from different Member States and non-Member States: often banks 
originate  the  loans  that  are  securitised,  while  financial  institutions  such  as  insurers  and  investment 
funds  invest  in  these  products  and  they  do  so  across  European  borders.  Furthermore,  the  regulatory 
framework  on  securitisation  is  largely  based  on  EU  legislation.  Differentiation  of  STS  products  can 
therefore only be introduced with an initiative at EU level. 
B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
A range of options have been considered to introduce STS criteria: to adapt the regulatory framework 
to  reflect  the  different  risk  profile  of  STS  products  and  to  standardise  the  building  blocks  of  the 
securitisation legislation (i.e. definitions, disclosure and due diligence requirements). In each field a no 
action option, a non-legislative and a legislative action have been considered. 
The preferred option is a legislative action that would introduce STS criteria, introduce a differentiated 
regulatory  framework  for  STS  products  and  standardise  the  building  blocks  of  the  securitisation 
legislation  (i.e.  definitions,  disclosure  and  due  diligence  requirements).  This  option  should  achieve 
differentiation  and  render  the  regulatory  treatment  more  risk-sensitive  than  currently.  Furthermore,  it 
should  standardise  currently  heterogeneous  provisions  in  EU  legislation  on  securitisation  definition, 

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disclosure and due diligence requirement. All this should in turn fight stigma and foster the revival of a 
safe and sustainable securitisation market. 
Who supports which option?  
The  vast  majority  of  stakeholders  are  supportive  of  this  initiative.  There  is  no  difference  in  terms  of 
category  of  respondents,  in  the  sense  that  the  vast  majority  of  legislators,  central  banks,  regulators, 
supervisors, market players and think tanks support the initiative.  

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
To the extent that the proposed policies will create a new channel of financing for the EU economy, 
one that is less dependent on banking sector constraints, they will reduce the effect of financial crises 
on  credit  provision  and  thus  on  growth  and  employment.  The  social  costs  of  such  crises  will  be 
reduced. Furthermore, by fostering the spread of securitisation structures whose risks can be analysed, 
understood  and  priced,  the  policy  options  will  foster  a  securitisation  market  conductive  to  better 
funding of the economy in a context of financial stability.  
Nothing  would  suggest  that  the  proposed  policy  will  have  any  direct  or  indirect  impacts  on 
environmental issues.  
What are the costs of the preferred option (if any, otherwise main ones)?  
Beyond  the  costs  for  market  participants  and  public  authorities  to  adapt  to  the  new  regulatory 
framework,  there  should  be  no  relevant  social  and  economic  cost.  Nothing  would  suggest  that  the 
proposed policy will have any direct or indirect impacts on environmental issues.  
How will businesses, SMEs and micro-enterprises be affected?  

The policy options chosen should have several positive effects on SME financing. First, the inclusion 
of short-term securitisations such as ABCP in the STS framework, with consequential improvement in 
their capital treatment, should foster the growth of this important source of SME financing.  
Secondly,  the  initiative  should  provide  banks  with  a  tool  for  transferring  risk  out  of  their  balance 
sheets. As a consequence, freed capital should be increasingly used by banks to provide new credit to 
families and firms, most of which are SMEs in the EU. 
Finally,  by  introducing  a  single  and  consistent  EU  securitisation  framework  and  encouraging  market 
participants  to  develop  further  standardisation,  the  initiative  should  reduce  operational  costs  for 
securitisations. Since these costs are higher than average for the securitisation of SME loans, the fall 
should have an especially beneficial effect on the cost of credit to SMEs. 

Will there be significant impacts on national budgets and administrations?  
No 
Will there be other significant impacts?  
No 

D. Follow up 

When will the policy be reviewed?  
The  forthcoming  legislation  will  be  subject  to  a  complete  evaluation  (about  4  years  after  its 
implementation deadline) in order to assess, among other things, how effective and efficient it has been 
in  terms  of  achieving  the  objectives  presented  in  this  report  and  to  decide  whether  new  measures  or 
amendments are needed. 

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