EU Agencies Seek to Cut Red Tape in €1.2 Trillion ABS Market

European financial authorities are exploring ways to streamline oversight of the €1.2 trillion ($1.3 trillion) asset-backed securities market and simplify reporting requirements, according to a report that offers recommendations for policymakers.

The region’s banking, insurance and securities supervisory bodies are proposing several measures to reduce red tape associated with the issuance of the instruments, including a “simplified due diligence approach” to all institutional investors in public and private asset-backed securities, according to the report released Monday.

The report also calls for consistent practices across the 48 authorities supervising the market, or alternatively moving to a more consolidated model.

“The key recommendations include clarifying definitions, incorporating further proportionality into due diligence and transparency requirements, and ensuring consistent supervision across the Union,” according to the report.

The note presents the findings of the Joint Committee of the European Supervisory Authorities, and provides recommendations to the European Commission. The group comprises the European Banking Authority, European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority.

“These recommendations will feed into the European Commission’s legislative review of the securitisation legislative framework, contributing to the development of well-functioning, resilient and transparent securitisation markets across the European Union,” the EBA said in a statement on its website.

The EU plans to boost its ABS market after former European Central Bank President Mario Draghi said that doing so would help make the bloc more competitive economically. As part of it, the subject is among priorities of the current Financial Services Commissioner Maria Luis Albuquerque.

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