ESMA consults on private templates for Securitisation Disclosure – more haste, less speed

Background 

On 13 February 2025, ESMA published a consultation paper on the revision of the disclosure framework for private securitisation under Article 7 of the EU Securitisation Regulation (EUSR) (Consultation). The Consultation proposes a one-size-fits-all simplified disclosure template (based on the Single-Supervisory Mechanism (SSM) template) but only for “European private securitisations”, recognising that investors in private securitisations are usually sophisticated and receive information bilaterally. ESMA previously published a consultation paper on securitisation disclosure templates in December 2023 (Initial Consultation) which discussed various options for improving the current reporting regime for both private and public securitisations. The Consultation addresses some of the issues faced by private securitisations which, with some exceptions, are broadly subject to the similar reporting obligations as public securitisations. For further information on that consultation, please see our previous article here and the Feedback Statement on the disclosure templates under Article 7. 

On 19 March 2025, the European Commission announced its Savings and Investments Union strategy to enhance financial opportunities (SIU); as part of a broader competitiveness and growth agenda, proposals for removal of barriers to securitisation are included, with confirmation that the European Commission will make proposals in Q2 2025 to due diligence and transparency requirements (as well as to adjustments to the prudential requirements for banks and insurers). This follows the European Commission’s Targeted consultation on the functioning of the EU securitisation framework (Targeted Consultation) and subsequent Call for Evidence; a number of responses, currently under assessment by the European Commission, called for more proportionate, less burdensome transparency and disclosure requirements. On 31 March 2025, the Joint Committee of the European Supervisory Authorities (Joint Committee) published their long-awaited report on the functioning of the EUSR (Article 44 Report), which includes proposals for reform, including in relation to disclosure and transparency which may inform the assessment of the EUSR by the European Commission. 

Consultation Proposals 

Below is a summary of key points of interest from the Consultation: 

• The templates are for “European private securitisations”, replacing the current Article 7(1)(a) requirements. 

No changes are proposed to the broader templates which would still be required for “public” securitisations. In the Consultation, ESMA appears to have opted for a proposal closest to the original Option C of the Initial Consultation (i.e. providing a dedicated private template with a targeted review aimed at streamlining the disclosure templates) which appears to have been the option favoured broadly by the market. However, the Consultation states that “originators, sponsors and SSPEs of private transactions must still provide the full set of ‘public’ disclosure information outlined in Article 7(1)(a) of the SECR to investors, potential investors and competent authorities upon request”. This may have been included for those respondents to the Consultation who want more granular information and for supervisors but seems to defeat the purpose of the reforms as participants would need systems to accommodate both the current and new templates to ensure the necessary information is available. The Article 44 Report has proposed a more proportionate, less burdensome approach to the templates, including considering permitting less granular reporting for certain asset classes, with amendments needed to the Level 1 text of the EUSR and Level 2 modifications and revisions to the templates would also address supervisory requirements. 

• No overhaul of the private/public distinction. 

A definition of “European private securitisation” is provided; this maintains the status quo where no prospectus is drawn up under the EU Prospectus Regulation and does not attempt to otherwise define what is a “private” transaction. We expect this topic to be developed further following the assessment of the Targeted Consultation; it cannot be ruled out that transactions currently falling within the definition could, under future proposals, be required to modify their reporting should they subsequently be categorised as public deals. The Article 44 Report discusses a possible definition of what is a “public securitisation”; this could include (i) a prospectus approved under the EU Prospectus Regulation; (ii) notes traded on EU-regulated markets, multilateral trading facilities (MTFs), organized trading facilities (OTFs), or other EU trading venues; (iii) securities marketed broadly with non-negotiable term (based on a market test where EU originators/sponsors must demonstrate that a transaction is not placed to a broad audience of investors (looking at US Reg S as an example)). A new definition could capture transactions that are currently private e.g. CLOs and some synthetics so the Joint Committee recommends that an impact assessment is needed to ensure that only transactions that are substantively “public” are captured. The Joint Committee suggests that defining “private” securitisations in more detail is too complex and notes the need to address supervisory issues for private transactions. 

• The template only applies where all sell-side parties are established in the EU. 

Non-EU participants will be disappointed that only transactions where each of the originator, sponsor, original lender and the SSPE are established in the EU can benefit from the proposals (with one party designated to fulfil the requirements). Third-country securitisations, including the UK, are therefore outside the scope and would still be required to report on the full templates. Requiring non-EU participants to provide full templates is costly for the market and limits the ability of investors to invest in third-country securitisations. The Article 44 Report however proposes a more streamlined approach for public and private (including third-country) securitisations which could alleviate some burdens. The Joint Committee also recommends exploring the possibility of intra-group exemptions and also considers the delegation of reporting obligations for small and medium-sized banks which could enhance data quality as well as reducing costs. 

In terms of due diligence, the Joint Committee also proposes a more proportionate approach, that would be more akin to the new UK approach, where investors receive sufficient information with a focus on substance (based on information that they need to receive), rather than on prescribed templated information. This could be helpful for third-country jurisdictions. The European Commission Report On the functioning of the Securitisation Regulation of 10 October 2022 (Commission Report) confirmed its interpretation of Article 5(1)(e) that full Article 7 templates are required by third-country securitisations in all circumstances. This prompted industry bodies to publish a request for relief letter in relation to Article 5(1)(e) of the EUSR, requesting that the national competent authorities use their enforcement powers in a proportionate and risk-based manner as a temporary measure pending provision of a simplified private securitisation template which the industry hoped would also cover third-country transactions. No relief was granted at the time by the Joint Committee; in its reply it felt that, in the absence of Level 1 changes to the EUSR, it was unable to address fundamental issues around third-country securitisations. The Consultation includes a question however as to whether the presence of the originator and sponsor in the EU should be considered a triggering factor for the proposals. It is not clear whether ESMA will feel that it is within its gift to widen the scope to third-country securitisations; may need to await for the outcome of the EU Targeted Consultation to see any further developments. 

• The private template is a one-size fits all simplified template regardless of deal or asset type. 
  • The template provides for aggregated data (so loan-by-loan data is not required but noting that full templates can be requested, as discussed above) and significant events with a separate section for synthetic securitisations. Whilst the information required is streamlined, it is still detailed and further consideration is needed as to whether all the fields are appropriate or useful for investors and regulators, as well as areas of duplication (see below). Optional environmental performance information is included for when Articles 22(4) or 26(d)(4) are applicable which is another area of potential overlap and which seems contrary to the wider need to streamline reporting. 
  • Investors must still receive the other Art 7(1)(e) disclosure and receive the investor reports in Annex XII (for non-ABCP securitisations) and Annex XIII (for ABCP) transactions and non-ABCP still have to complete Annex XII. Reporting remains quarterly for non-ABCP and monthly for ABCP. Questions 17 and 22 of the Consultation note the duplication of information between the Investor Report and the private template relating to underlying assets and risk retention; the market may wish to avoid this to limit costs and time. 
  • The changes would be implemented via amendments to the current disclosure implementing technical standards, including with an Annex XVI template. 
• The proposed template format is based on the SSM template for significant institutions as modified. 

Significant institutions will be familiar with the format so it will be helpful for them in terms of having systems that can adapt to this. The structure includes: 

• Key transaction information: this is organised into eight tables to capture specific information for the market and supervisors, including significant events, structural features and transaction characteristics; 
• Exposure and risk retention: quantitative and qualitative information and risk retention (thus replacing the current obligation to report on risk retention when required and creating a disparity with public securitisation which would not be required to report on this basis); 
• Information on securitisation positions (not required for ABCP programmes); and 
• Synthetic securitisation information section: this includes information on risk transfer and loss allocation, attachment and detachment points as well as the type of credit protection, protection provider and agreement details. 
• The significant event disclosure requirement is extended to private securitisations.

The fields include a categorisation of the significant event, such as material breaches, changes in structural features, shifts in risk characteristics, or loss of Simple, Standardised, and Transparent Securitisation (STS) status. Other reportable events include remedial or administrative actions, material amendments to transaction documents, or any other developments that fall under Article 7(1)(g) of EUSR, including the date on which the event occurred and a detailed description. Requiring template reporting for significant events for private deals adds an additional layer of reporting; again this does not align with the wider calls for a more proportionate approach to reporting. 

• The template meets supervisory requirements. 

A focus of the template is for the provision of information to supervisors. ESMA notes that the exemption from the obligation for private securitisations to report information via a securitisation repository (SR) has raised questions about access to information for supervisors and potential investors and often leads to the delivery of information in a customised and bespoke manner. The Article 44 Report also supports the need for supervisors to receive information templates which are seen as “valuable for supervisory authorities’ risk monitoring activities” with possible reporting to an SR but notes that third-country securitisations would not be subject to this requirement. 

• The reporting would be in CSV format. This may be a welcome change to some market participants but it may involve systems changes that could entail costs. The Joint Committee also provides support for more flexible reporting formats. 
• Grandfathering. The Consultation does not discuss the impact on existing transactions and whether these will be subject to new private template requirements. Lack of grandfathering would involve costs for market participants. 

UK position 

The implementation of the new UK Securitisation Framework, which came into force on 1 November 2024 (New UK Securitisation Framework), included a more proportionate regime for third-country securitisations, providing for “sufficient” disclosures to assess risk, with access to further information. This is a more flexible regime in relation to third-country securitisations which does not require UK institutional investors to verify investments based on templates. The responses to the EU Targeted Consultation indicated that this could be a useful approach for the EU to adopt. 

UK regulators are considering the possibility of changes to the disclosure templates including (i) which securitisations should be considered public and be required to report via an SR and (ii) whether those transactions defined as private securitisations should be subject to a less stringent, more proportionate reporting regime. We will watch this space with interest and particularly for areas of divergence between the two regimes as they develop. The Article 44 Report applies to the EU requirements only; there is no indication at this stage that the UK regulators are considering a similar review or will consider any proposals contained in this Article 44 Report. 

Please see Not harder, still smarter? The new UK securitisation framework nears the finish line and Smarter, not harder - a new securitisation framework for the UK for more information. 

Final thoughts

At first glance, the streamlining proposals advanced under the Consultation might appear to be an improvement to current requirements; it is certainly positive for the market that ESMA is willing to adopt a more proportionate regime with aggregate-level reporting and reduced requirements for transaction-specific data. However, there are a number of areas where further consideration is warranted. In particular it is disappointing for third-country securitisations, and EU investors wanting access to them, that third-country transactions remain subject to the current Article 5(1)(e) and 7 requirements; this is costly for the market and does not encourage the much-needed growth that is currently a focus of industry and political statements (including for the Capital Markets Union and other strategic objectives). 

Other areas such as duplicative and additional reporting requirements, as well as the possibility that full templates may nevertheless be required and a lack of grandfathering could impact client systems and entail additional costs. All of these issues may result in additional costs and stress for market participants and would benefit from further consideration. 

Since the Initial Consultation, we have seen a plethora of calls from industry and regulators for the removal of barriers to of the EU securitisation market and to address the wider goals for Capital Markets Union and, more recently, SIU. The Consultation therefore arrives at an interesting time when possible future proposals, which could involve changes to the requirements and definitions relating to public and private securitisations, could intersect with, and impact, the final outcome of the Consultation. The Article 44 Report includes some recommendations which overlap with the Consultation and which, if taken into account by the European Commission, could influence final outcomes. 

The benefits of a simplified, proportionate template for private securitisations would be welcome by many market participants; this should however be considered as part of the big picture wider reforms that are need to drive the market forward, including for third-country securitisations. 

Timing 

A final report and draft technical standards will be submitted to the European Commission by Q2 2025. This is likely to coincide with the timeline for the assessment of the responses to the EU Targeted Consultation and the Call for Evidence which is expected this summer. 

For more information on some of the points above please also see: 

• Not harder, still smarter? The new UK securitisation framework nears the finish line 
• Securitisation disclosure - could less be more? 
• Smarter, not harder - a new securitisation framework for the UK

This note is for guidance only and should not be relied on as legal advice in relation to a particular transaction or situation. Please contact your normal contact at Hogan Lovells if you require assistance or advice in connection with any of the above. 

Authored by Jane Griffiths and Patrick Evans.