The European Parliament’s ECON committee agreed their report on the EU securitisation framework this week.¹ While the stated ambition is clear on reviving the stagnant securitisation market and supporting the Savings and Investments Union, PGIM fears the approved text delivers timid progress rather than real ambitious reforms.

The Missing Investor Perspective

The European Parliament’s approach follows in the footsteps of the European Commission’s June 2025 proposals and the  December 2025 agreement between EU member states, in that it neglects the needs of EU investors.

While the need for a vibrant securitisation market has been recognised at Europe’s highest political levels for years as evident from reports by former Banque de France governor Christian Noyer, former Italian prime minister Enrico Letta and former European Central Bank president Mario Draghi, the direction of travel of this file remains largely disconnected from the reality of how investors construct portfolios and allocate capital.

Indeed, the Parliament’s and the Council’s positions have improved the initial framework but neither fully addresses the issues that continue to discourage investor participation.

In particular, the combination of detailed and rigid EU transparency obligations placed on non‑EU issuers and prescriptive due diligence requirements placed on EU investors risks creating a hard practical barrier to global investments in this asset class. 

It is a positive step that the Parliament has removed a requirement on EU investors to obtain EU securitisation template reports from non-EU issuers. But this has been replaced by a requirement to verify that non-EU issuers provide equivalent transparency to EU standards – a process that remains too onerous and prescriptive to meaningfully improve market access.

Access to the global securitised market is essential for institutional investors seeking diversification and scale. Constraints on market access have stunted the market’s development in recent years.

European securitisation issuance has stagnated over the past decade, with annual figures averaging €231 billion, according to AFME.² The volumes pale by comparison with the U.S., where issuance was roughly seven times larger in 2025.

By restricting access to global securitised assets, this caps the capacity of Europe’s own long‑term investors to support the growth of EU securitisation markets. The ability to build diversified, international portfolios is what ultimately enables investors to commit more capital, including to European securitisation.

The Cost of Incrementalism

The Commission’s original proposals were already widely viewed as overly cautious. The Parliament and Council have sought to inject more ambition, but the changes remain incremental and will not deliver tangible benefits for investors.

The due diligence requirements have been criticised by industry watchers for being cumbersome and requiring information that most non-EU issuers simply do not provide, making these investments off limits to EU investors.

While it seemed, there was a political desire among member states to allow investors to be able to obtain alternative disclosure formats from non-EU issuers, the Council's ultimate negotiating position reverted to a rigid, technical approach to regulating investors.

Perhaps the largest measure of success of this reform – in the broader context of the Savings and Investments Union (SIU) agenda – is the extent to which it may reduce Europe’s over-reliance on bank financing and crowd in a broader group of institutional investors: pension funds, insurance, asset managers. This remains in doubt. 

As a result, nominal adjustments will not deliver the landmark change Europe needs. If Europe’s securitised market was revived to pre-financial crisis levels, it could generate an additional €250–500 billion in private financing per year, while reducing constraints on European bank balance sheets.

We have seen some positive EU reforms. The European Commission recently proposed a reduction of capital requirements for certain insurers to hold securitised products, which may bring benefits. Also, policymakers have shown cautious open-mindedness to addressing limitations on greater UCITS investments into securitised assets. But the effect of this positive change will be muted by the broader prescriptive approach.

A recurring flaw in the EU debate is the tendency to treat securitisation revival as a question of issuance and supply alone, whereas vibrant demand plays an equally important role. Unlike investors outside Europe, EU investors are locked out of roughly 70% of the global market. If EU investors are not empowered to compete globally, will they invest in the technology and human capital needed to manage securitised assets? The current due diligence framework has proven ineffective in supporting market growth.

Putting the “I” in the SIU

Policymakers can look to recent changes proposed by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to the UK’s Securitisation Regulation as a positive example.

The UK is moving towards an outcomes‑based securitisation framework that focuses on investor protection and market integrity without prescribing process. This approach recognises that equivalent outcomes can be achieved through different means, particularly in global markets, and acknowledges that investor access to diversified pools of risk is a strength.

By shifting the emphasis away from rigid issuer‑level prescriptions and onto investor outcomes, London is explicitly enabling its investor base to participate fully in global securitised markets. The result is a framework that preserves high standards while avoiding structural barriers that unnecessarily constrain portfolio construction.

The expected new UK framework focuses on ensuring that originators of securitisation are well-regulated and that loan underwriting is robust, but it avoids a rigid tick-the-box approach to investor due diligence. In this regard, the UK is moving toward the global norm of regulating securitisation and casts the EU as the outlier with its highly burdensome regulatory approach.

It is now up to the European Parliament and the Council under the Cypriot and Irish Presidencies to find a final compromise. Time will tell if the final phase of inter-institutional negotiations – so-called “trilogues” – simply delivers a quick agreement or a framework that delivers real long-term results for the market.

Reviving European securitisation is not about revisiting the past. It is about enabling Europe’s capital markets to fund its future. If the EU is serious about growth and competitiveness, it must be equally serious about empowering the investors whose capital will make those goals achievable. Without bolder reform, there will be no securitisation revival worthy of the name.