The European Central Bank has put forward an opinion that mutual funds in Europe should be allowed to hold up to 20% of their assets in securitisations issued by a single bank or lender, exceeding a 15% threshold proposed by the European Commission and the current 10% cap that applies to UCITS funds.
Published in Frankfurt, the ECB's view addresses the Commission's proposal to raise the limit on UCITS funds' exposure to simple, transparent and standardized securitisations originating from a single entity. The central bank said raising the cap to the level it recommends could help draw more investor participation into the securitization market.
At the same time, the ECB warned that completely removing the limit or increasing it too much would be inadvisable. The institution emphasized that maintaining a numerical ceiling supports risk management and safeguards for investors, a point it flagged as particularly important for retail participants.
The opinion reiterates that securitization can play a role in expanding bank lending. It also acknowledges the political sensitivity that securitization still carries in parts of Europe because of its association with the 2008 financial crisis. The ECB noted that banks have previously argued the bloc's efforts to revive securitization are not adequate.
Beyond the specific limit on UCITS holdings, the ECB's opinion surveyed broader questions related to capital markets integration and supervisory cooperation across Europe. One focus was on data sharing among supervisory authorities and on clarifying legal texts so the central bank can better access information that investors disclose.
The ECB said enhanced access to such information would support more informed monetary policy choices and improve assessments of financial stability. It singled out private credit as an area where monitoring is constrained by a lack of sufficient data available to the central bank and other authorities.
The central bank's recommendation therefore combines a push to make securitization more accessible to investors with a cautionary note about retaining protections and improving data flows for oversight.