Reforms will unlock greater access to capital and support economic growth across the EU
Brussels, Belgium — MFA urged the European Commission to implement targeted securitisation reforms to meet its economic growth and capital market integration goals in a letter submitted today. The recommendations were submitted in response to the Commission’s Call for Evidence to review the securitisation framework.
“A right-sized securitisation framework is essential for building stronger European capital markets and achieving the goals of the EU Savings and Investments Union,” said Jillien Flores, MFA Chief Advocacy Officer. “Targeted reforms will enhance market participation, help banks manage their risks and free up capital, improve capital formation, and help connect global capital with European businesses and investors, including pensions.”
MFA’s recommendations will unlock the full potential of EU securitisation markets and allow the financial sector to better serve the needs of the European economy. The recommendations accomplish this by facilitating broader investor participation, reducing risk on banks’ balance sheets, and increasing the capital available to borrowers and for long-term investment.
MFA’s three primary recommendations for the EU Securitisation Regulation (SECR) are to:
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Narrow the definition of securitisation – The current SECR definition is overly broad and creates legal uncertainty, deterring market participation. Harmonising the EU definition with the U.S. framework would bring clarity and consistency, reduce compliance risk, and promote cross-border activity.
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Remove duplicative and burdensome due diligence requirements – SECR due diligence rules are overly burdensome and not aligned with the risk profile of institutional investors. Alternative Investment Fund Managers (AIFMs) already meet strong risk-management obligations under Alternative Investment Fund Managers Directive (AIFMD). Removing the duplicative requirements—especially for private securitisations—would reduce barriers and encourage greater market participation.
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Permit AIFMs to sponsor securitisations – Expanding the definition of “sponsor” to include AIFMs would give institutional investors greater flexibility to structure and manage securitisations, leading to more tailored investment strategies and improved access to EU capital markets.
Read the full letter here.
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About the global alternative asset management industry
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
