INTRODUCTION Contributed by: Tamara Box and Sarah Caldwell, Reed Smith
Cross-jurisdictional challenges and divergence
synthetic transactions in the EU’s Simple, Trans - parent, Standardised (STS) framework incentiv - ises issuance by reducing regulatory burdens on eligible assets. This trend is likely to gain momentum as Basel III requirements come into full force, driving demand for synthetic securiti - sation as a risk management tool across Euro - pean markets. ESG securitisation Investor interest in ESG-labelled securitisation products has grown, particularly in Europe, where policymakers continue to advocate for sustainable financing. The European Central Bank’s (ECB) first interest rate cut in June 2024 has provided further impetus for ESG invest - ment, particularly in green RMBS and auto ABS linked to electric vehicles. Europe’s securitisation sector could see substantial growth if regulatory incentives and standardisation measures accel - erate, with potential issuance in green finance projected to exceed EUR300 billion annually by 2030. Infrastructure securitisation in Asia-Pacific Rapid urbanisation and regulatory incentives in India and other Asia-Pacific markets are driving demand for infrastructure securitisation, particu - larly in sectors such as transportation and ener - gy. India’s infrastructure-focused securitisation growth aligns with broader economic develop - ment goals, supported by public-private part - nerships and investment-friendly policies. As the securitisation market in Asia-Pacific continues to mature, infrastructure securitisation is expected to become a critical financing tool for regional growth. Conclusion: Securitisation Outlook for 2025 and Beyond The securitisation market in 2025 will be shaped by an intricate interplay of economic, regula -
The disparity in securitisation regulatory frame - works between the US and EU continues to present operational challenges, especially for cross-border transactions. For instance, US government-backed entities such as Fannie Mae and Freddie Mac play a crucial role in supporting the MBS market, providing significant liquidity to US mortgage securitisations. By contrast, the EU relies on private sector securitisations, with the European Investment Fund (EIF) offering only limited public guarantees. This structural differ - ence impacts investor participation and places the EU at a competitive disadvantage in terms of liquidity and market size. These regulatory developments underscore the securitisation market’s need for balance between growth and compliance. As new rules take effect, regulators are aiming to foster mar - ket stability, enhance investor protection and promote capital allocation toward environmen - tally and socially responsible projects. Nonethe - less, diverging approaches between major juris - dictions continue to complicate cross-border issuance strategies, particularly as securitisation participants await potential post-election shifts in US, UK and Indian regulatory policies. Opportunities and Emerging Themes for 2025 As securitisation markets navigate complex reg - ulatory landscapes and macro-economic shifts, several emerging themes are poised to shape
2025 issuance trends. Synthetic securitisation
Europe’s synthetic securitisation market, espe - cially in France and Germany, has seen substan - tial activity as banks increasingly utilise synthetic products to manage balance sheet risk and meet stricter capital requirements. The inclusion of
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