Milan: Negotiators return to the securitisation file on 29 September with the hardest questions untouched. Two rounds of trilogue have produced agreement on structure and almost nothing on substance. The Irish presidency wants the file closed before its term ends on 31 December, which leaves roughly three months for issues that have resisted a year of technical work.
Risk retention sits at the centre. Current rules oblige originators to keep five percent of the exposure they package and sell, the regulatory answer to the originate-to-distribute incentives that failed in 2008. Parliament defended the threshold. Parts of the Council and much of the industry argue five percent is calibrated for a market that no longer exists, and that European issuance has fallen so far behind American volumes that the prudential cost now outweighs the protection.
The second open question is definitional. Where the line falls between public and private securitisation determines which deals carry full disclosure and which do not. Council working parties met on 7 and 8 September to work through it, and delegated the remainder to technical level. The Commission agreed to prepare non-papers on Parliament’s amendments, which usually signals that the co-legislators are not yet close enough to draft compromise text.
Supervision forms the third block. National authorities currently handle securitisation oversight with wide variation in practice. Some delegations want a stronger European role, partly to reduce forum shopping and partly because the savings and investment union rhetoric implies a central supervisor somewhere. Others see a competence grab dressed as market integration.
The political framing has shifted since the file opened. Securitisation was once discussed as a risk problem. It is now discussed as a funding problem, specifically the question of how European banks free up balance sheet to lend against the defence and infrastructure spending capitals have promised. That reframing helps the industry case, but it does not resolve whether a market revived by lighter rules produces the credit anyone wants.
The legislative file pairs amendments to the Securitisation Regulation with changes to the capital requirements framework, so bank capital treatment travels with disclosure rules. That coupling raises the stakes. A concession on one side of the package changes the arithmetic on the other.
Investors watching the file mostly want predictability. Insurers and pension funds cite due diligence burdens rather than capital charges as the reason they stay out, which suggests the disclosure question may matter more to volumes than the retention fight that absorbs the political energy.
If the Irish presidency misses its deadline, the file passes to the next chair with Parliament’s mandate intact and less appetite for compromise. Nobody in the room wants that, which is the strongest argument that something will be agreed by December.
