Adoption of the EFMLG report on legal obstacles to cross-border securitisations in the EU

On 7 May 2007, the EFMLG adopted its report on legal obstacles to cross-border securitisations in the EU. Over the past years, both at the national and European level, securitisation markets have witnessed important legislative and regulatory developments. At the Member States level, a number of initiatives have been taken to establish an appropriate legal and regulatory environment to facilitate the development of domestic securitisation markets across Europe. However, the securitisation landscape in the European Union (EU) is characterised by its diversity and its fragmentation and a number of legal impediments affect the development of true pan-European securitisations.

The assessment of national legal frameworks undertaken by the EFMLG in the fifteen 'old' EU Member States (i.e. the EU Member States before the May 2004 enlargement), indicates that full harmonisation of securitisation laws is not a realistic or even desirable objective, since such an exercise would affect a number of areas of law which are, for some Member States, intimately related to the roots of their domestic legal systems. However, following extensive consultation with market participants, the EFMLG concluded that a certain number of principles common to all jurisdictions need to be applied to ensure a high level of transparency, efficiency and legal certainty with regard to securitisation transactions. Most of these principles have been translated into EFMLG recommendations for further convergence of securitisation laws in the EU, which are set out in the report. As an alternative to a full harmonisation scenario, these principles could be enshrined in an EU directive dealing with certain legal aspects of securitisation.

A more effective and homogeneous application of Internal Market principles to the European securitisation industry would contribute to the diversification of opportunities offered to professionals involved in the securitisation market and to investors across the EU Member States. This could be particularly beneficial in the Member States that have not developed a specific legal framework on securitisation and/or where the securitisation market remains underdeveloped.

The EFMLG trusts that the recommendations contained in the enclosed report will increase the awareness of legislators to the need to take legislative action to promote the development of an integrated European securitisation market. Without the support of public action, it is unlikely that pan-European integration of this promising financial sector will occur.

Report + annex

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