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At EuroCLOs in London, industry experts from PGIM, Schroders and the Association for Financial Markets in Europe came together to discuss the regulatory developments shaping Europe’s CLO and securitisation markets. The panel explored how regulatory change is influencing investor demand, market confidence and issuance dynamics.
The following perspectives reflect comments made by Taggart Davis, Head of Governmental Affairs, EMEA at PGIM, during the panel discussion.
Regulatory requirements in Europe restrict the range of securitised assets that EU investors can access compared with other major markets. A narrower investable universe limits diversification opportunities and suppresses investor demand, with further implications for issuance volumes and market depth. Expanding investor access was highlighted as an important factor in supporting a stronger and more resilient European securitisation market.
Highly prescriptive regulatory frameworks can influence how securitisation is perceived, sometimes reinforcing stigma rather than aligning with underlying credit performance. Despite demonstrating resilience in the post-crisis period, securitisation continues to face disproportionate levels of regulatory detail. A more principles-based approach was seen as a way to preserve transparency and safeguards while supporting investor confidence and participation.
Recent changes to capital treatment under Solvency II illustrate how targeted regulatory adjustments can affect investor behaviour. Improved alignment between capital requirements and risk has increased the relative attractiveness of senior securitised exposures for insurers. While further calibration may still be needed, the changes represent a positive step towards broader long-term participation from insurance investors.
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