A new age for the European securitization market? The Council and the Parliament’s political agreement on the Securitization Regulation
In a press release dated 21 October 2026, the European Council reported on their recent political agreement with the EU Parliament regarding planned measures meant to simplify and de-clutter the process of investing in certain types of EU securitization funds (the “Agreement”).
The Agreement comes following the already year-long process of legislative proposal 2025/826 (the “Securitization Regulation”), aiming to create a standardized securitization framework in the EU.
The Agreement includes the following proposed measures:
- Basing capital requirements for banks on a risk sensitive basis, allowing for a lower capital requirements in low-risk securitization vehicles
- Introducing the category of “resilient” securitizations and strengthening the existing label of simple, transparent and standardized (“STS”) in order to improve risk sensitivity
- Converging supervisory standards and practices in the EU by creating supervision of STS at the EU level
- Raising investment limits for institutional investors who qualify as undertakings for collective investment in transferable securities (“UCITs”)
- Changing the label of STS to support cross-border market integration amongst other improvements
The provisions of the Agreement could lead to potential growth in securitization activity in Luxembourg by offering more favorable opportunities to European banks wishing to invest and by allowing Luxembourg-domiciled funds (such as UCITs) to invest more flexibly in securitization exposures.
If the Agreement is implemented in the final version of the legislation, institutional investors may be given a host of new opportunities to invest in securitization ventures.
This Agreement has been supported by the Association of Banks and Bankers, Luxembourg (“ABBL”) as a step in the right direction in the legislative process of the Securitization Regulation.
Our team’s vast experience in securitizations law sets us apart as the right choice to advise you on the legal aspects of current and future securitization ventures.
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