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Structured debt reporting in the U.S. and EU follows very different approaches, creating challenges for institutions operating across both regions. Here's a quick summary:
Key Differences:
For financial institutions, compliance requires navigating these distinct systems. Leveraging technology platforms simplifies processes, ensuring adherence to both regulatory landscapes while supporting cross-border transactions.
Grasping the nuances of US reporting requirements is crucial for understanding how they compare to EU guidelines. The United States enforces stringent regulations through various agencies, with non-compliance carrying hefty penalties and potential disruptions to operations. These uniquely American mandates lay the groundwork for examining the differences with EU regulations in later sections.
The Dodd-Frank Act, particularly Section 941(b), plays a central role in US structured debt regulations. It requires securitization sponsors to retain a portion of the credit risk for asset-backed securities (ABS). This ensures that sponsors remain financially invested in the performance of the assets, aligning their interests with those of investors.
The Securities and Exchange Commission (SEC) has implemented seven rulemaking provisions under the Dodd-Frank Act, focusing on ABS. These rules cover key areas such as disclosure requirements, representations and warranties, due diligence processes, and conflicts of interest in securitizations. Additionally, Regulation AB, another SEC initiative, demands detailed initial disclosures for specific ABS types to enhance transparency in the market.
Other federal agencies also contribute to structured debt oversight. For instance, the Federal Reserve Board requires firms to include in their capital plans any anticipated changes to business strategies that could significantly affect capital adequacy. Meanwhile, the Trade Reporting and Compliance Engine (TRACE) mandates comprehensive transaction reporting. Both buy-side and sell-side parties must report eligible transactions to TRACE, creating a robust audit trail for regulatory purposes.
In the US, the responsibility for structured debt reporting primarily falls on three types of entities: originators, sponsors, and issuers of asset-backed securities.
The structured finance market has grown significantly over the past decade, but concerns about transparency in the securitization process persist. These concerns trace back to the model's origins in 1985. To address these issues, FINRA encourages firms to proactively self-report any challenges with TRACE reporting to its Market Regulation Department.
Regulatory oversight in the US is a patchwork of responsibilities divided among multiple agencies, creating obstacles for seamless coordination. Organizations must juggle differing timelines, data formats, and compliance expectations set by agencies like the SEC, Federal Reserve, FDIC, OCC, and CFTC. For firms operating across various business lines or jurisdictions, this fragmented landscape can significantly increase compliance costs and complexity.
The Dodd-Frank Act aimed to improve systemic risk oversight by establishing the Financial Stability Oversight Council (FSOC). However, the FSOC's authority and collaborative efforts have faced limitations. Regulatory agencies often operate independently, enforcing overlapping requirements for similar securitization activities. This can lead to inconsistencies in interpreting regulations and enforcement actions, making compliance planning more complicated and raising the risk of unintentional violations. These challenges highlight the operational differences between US and EU regulatory frameworks, which will be explored further in the following sections.
The European Union (EU) handles structured debt reporting in a way that stands apart from the United States. Instead of a fragmented system, the EU relies on a centralized, harmonized framework. This unified structure ensures consistent expectations for market participants across all member states.
The EU's approach is built on a single, integrated rulebook that applies to all member countries. This system emerged as a response to lessons learned from the 2008 financial crisis, aiming to create more integrated capital markets and simplify compliance requirements. With this backdrop, let’s break down the EU’s key rules and oversight mechanisms.
A cornerstone of the EU's structured debt framework is the EU Securitization Regulation (EUSR) 2017/2402. This regulation was designed to revitalize the European securitization market while addressing challenges exposed during the global financial crisis. The EUSR rests on three primary pillars:
The regulation also introduces criteria for Simple, Transparent, and Standardized (STS) securitizations, which benefit from preferential capital treatment. It applies broadly, covering institutional investors in both public and private securitizations across the EU, regardless of where the transactions are issued.
In a move to simplify compliance, the European Commission proposed amendments to the EUSR on June 17, 2025. These changes aim to reduce the number of mandatory reporting fields by 35%, reflecting an acknowledgment of the burden excessive reporting can place on market growth. As the European Commission explained:
"aims to remove undue obstacles that hinder the growth and development of the EU securitisation market, but without introducing risks to financial stability, market integrity or investor protection." - European Commission
The EU’s disclosure framework is built on uniform standards that apply consistently across all member states. Under the Transparency Directive, amended by Directive 2013/50/EU, companies with securities traded on regulated markets must meet specific reporting requirements. For instance, annual financial reports must be prepared in the European Single Electronic Format (ESEF), using iXBRL for consolidated financial statements under IFRS standards. This standardization improves comparability across originators and jurisdictions.
Each EU country operates an Officially Appointed Mechanism (OAM), a centralized repository for company disclosures, making it easier for investors to access critical information. Additionally, the forthcoming European Single Access Point (ESAP) will provide EU-wide access to financial data, with partial functionality by mid-2027 and full implementation by 2030.
To further support transparency, the EU’s Regulatory Technical Standards (RTS) require issuers, originators, and sponsors to disclose key information on a website designated by the European Securities and Markets Authority (ESMA). These rules also extend to non-European transactions if any major party involved is based in the EU. Standardized templates are mandated for loan-level data and essential documents, such as offering materials and investor reports, with regular quarterly updates and immediate disclosure of significant changes.
The EU’s centralized approach to oversight ensures consistent enforcement and helps prevent regulatory loopholes. The European System of Financial Supervision (ESFS) oversees financial supervision across the EU, while ESMA acts as the central coordinating body, promoting uniform supervision among member states’ regulatory authorities. ESMA’s creation was inspired by the 2009 de Larosière report, which called for a more consolidated supervisory framework.
"ESMA's mission is to enhance investor protection, promote orderly financial markets and safeguard financial stability." - ESMA
ESMA also works to deepen the EU Single Market in financial services by expanding the single rulebook and ensuring consistent supervision.
This centralized oversight proves particularly valuable during financial crises. EU regulations for central counterparties (CCPs) and central securities depositories (CSDs) establish common standards that reduce risks and inefficiencies stemming from fragmented national rules. These standards also enable swift, coordinated responses during turbulent times.
On October 8, 2024, the Council of the EU adopted the "EU Listing Act" package, aimed at making public capital markets more accessible for EU companies, especially small and medium-sized enterprises. Published in the Official Journal on November 14, 2024, this package includes updates to the EU Prospectus Regulation, the Market Abuse Regulation, and the Markets in Financial Instruments Regulation.
For participants in the structured debt market, this centralized approach offers clear benefits. It reduces compliance costs by providing consistent guidance through ESMA, while coordinated implementation across member states facilitates more efficient cross-border transactions.
The regulatory landscapes in the US and the EU differ significantly, driven by their distinct approaches to oversight. The US operates under a fragmented system with multiple agencies overseeing various aspects, while the EU has established a centralized framework that applies uniformly across its member states. These structural differences influence key areas like credit risk retention and disclosure standards.
Credit risk retention requirements underscore the contrasting regulatory philosophies of the US and the EU. Both regions enforce a 5% retention rule, but they implement it in notably different ways.
Who Retains Risk and Scope: In the US, the focus is on sponsors - similar to what the EU defines as "originators." The rules apply specifically to securitization transactions involving asset-backed securities. In the EU, the rules extend to any securitization where credit risk is divided into tranches with distinct payment and subordination structures.
Retention Methods: The EU allows flexibility in meeting retention requirements, including options like random sampling or first-loss retention. In contrast, the US does not provide equivalent alternatives. Both frameworks mandate maintaining a 5% economic interest throughout the life of the deal.
Measurement Standards: The US uses fair value to calculate horizontal or first-loss retention, whereas the EU bases this calculation on nominal value.
Exemptions and Flexibility: The EU does not offer exemptions for specific asset classes, unlike the US. However, the EU's regulatory standards allow retention forms to adapt in exceptional cases, such as aligning with third-country risk retention rules.
Duration and Transfer Restrictions: US rules include a sunset mechanism that lifts hedging and transfer restrictions under certain conditions. Meanwhile, the EU imposes these restrictions consistently throughout the transaction's life.
These differences in risk retention illustrate how the two jurisdictions prioritize varying aspects of regulatory compliance. Next, we turn to how disclosure standards further differentiate their approaches.
Disclosure requirements reveal another stark contrast between the US and EU frameworks. The US employs a fragmented approach, while the EU takes a unified path.
Scope and Materiality: The EU's Corporate Sustainability Reporting Directive (CSRD) uses a double materiality approach, addressing a broad range of sustainability topics. In contrast, the US Securities and Exchange Commission (SEC) focuses on financial materiality, primarily tied to climate-related risks.
Regulatory Alignment: The CSRD integrates with broader EU regulations like the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy. Meanwhile, the SEC aligns its rules with the Task Force on Climate-Related Financial Disclosures (TCFD) framework.
Scale and Coverage: The CSRD applies to approximately 49,000 medium and large companies, including private and public entities with at least 500 employees. Its scope and level of detail surpass any other mandatory sustainability reporting regime currently in place.
Emissions Reporting: The CSRD mandates reporting on Scope 1, 2, and 3 emissions. By contrast, the SEC requires disclosure of Scope 1 and 2 emissions only if deemed material by the reporting entity.
| Aspect | United States | European Union |
|---|---|---|
| Regulatory Structure | Fragmented (SEC, CFTC, OCC, Fed) | Centralized (ESMA coordination) |
| Risk Retention Target | Sponsors | Certain investor types |
| Retention Percentage | 5% | 5% |
| Retention Measurement | Fair value calculation | Nominal value |
| Retention Forms | Limited options | Random sample or first loss permitted |
| Transfer Restrictions | Sunset mechanism available | Apply at all times |
| Disclosure Scope | Climate-focused | Comprehensive ESG |
| Materiality Approach | Financial materiality | Double materiality |
| Emissions Reporting | Scope 1 & 2 (if material) | Scope 1, 2 & 3 required |
| Exemptions | Asset class-specific exemptions | No asset class exemptions |
| Cross-Border Flexibility | Limited | Exceptional circumstances provision |
For institutions operating in both jurisdictions, these differences create unique challenges. In the US, navigating multiple regulatory bodies with potentially conflicting rules adds complexity. Meanwhile, EU entities benefit from a streamlined, consistent framework that demands more extensive disclosure. Global financial institutions may need to adopt dual compliance strategies to effectively manage the fragmented US system alongside the EU's centralized approach.
Handling structured debt reporting across US and EU jurisdictions presents a complex challenge for financial institutions. To tackle these regulatory differences, technology platforms have become indispensable. These tools offer automated solutions that simplify compliance processes and help reduce operational risks. In doing so, they play a critical role in supporting cross-border transactions.
Modern platforms address the fragmented nature of cross-border structured debt transactions by centralizing regulatory processes. A great example is Debexpert. Since launching in the US in late 2020, the platform has facilitated 10 auctions, amounting to $60 million in debt portfolios. Its design enables smooth operations across varying regulatory environments, providing essential infrastructure for institutions managing compliance in both the US and EU. This approach directly responds to the differing reporting demands of these regions.
"Selling and buying delinquent debt is quite a complicated process. We make it easier and clearer." - Oleg Zankov, Product Director and Co-founder of Debexpert
The market potential is enormous. The US non-performing loan (NPL) market, valued at $120 billion, is the largest globally. In 2019 alone, investments in delinquent debts totaled $4 billion. By streamlining disclosure requirements, risk calculations, and reporting timelines, technology platforms are reshaping how institutions navigate these markets.
Building on their cross-border capabilities, modern platforms now offer real-time regulatory monitoring - an essential feature for institutions managing structured debt across multiple jurisdictions. Advanced software tracks regulatory updates and alerts compliance teams of any changes, ensuring organizations stay aligned with evolving US and EU standards.
Automated compliance reporting further reduces the complexity of meeting diverse requirements. These systems collect data and generate reports tailored to specific regulatory frameworks, saving time and effort.
Debexpert’s platform stands out with its specialized features designed to meet compliance needs. It includes portfolio analytics, secure file sharing with end-to-end encryption, and real-time communication tools for buyers and sellers. These capabilities address critical transparency and documentation requirements demanded by both US and EU regulations.
"With the Debexpert platform, users can sell and buy debt portfolios quickly, having 100% control at all stages of a transaction. The service becomes more convenient and functional every year. We do our best to create a positive experience for debt sellers and buyers with changes that advanced digital technology platform brings to any market." - Ivan Korotayev, CEO of Debexpert
Comprehensive audit trails further enhance compliance by providing chronological records of all activities, which are invaluable during regulatory reviews. Additionally, integrated risk management tools allow platforms to assess and mitigate risks in real time.
Technology platforms are revolutionizing traditionally opaque debt markets by standardizing processes and improving visibility. This shift addresses inefficiencies in structured debt trading, making the process more efficient and reliable.
Enhanced data security features and customizable templates are key to aligning with both US and EU regulatory frameworks. These templates bridge the gap between the fragmented oversight in the US and the centralized standards in the EU.
The transformation is already underway. As Ivan Korotayev puts it:
"The NPL market is undergoing digital transformation. The new services make the transaction process faster, easier, and more transparent. Even conservative markets, such as the NPL market, will soon become more dynamic, modern, and much more efficient for all of its participants."
Debexpert exemplifies how technology platforms can ensure regulatory compliance while boosting operational efficiency. The platform’s rigorous compliance processes secure every transaction. Moreover, technologies like AI, machine learning, and big data analytics are enhancing platform capabilities. These tools improve risk assessments, predictive analytics, and automated decision-making. Together, these advancements empower institutions to navigate the nuanced differences between US and EU reporting standards while maintaining strong compliance practices.
Structured debt reporting presents distinct challenges in the US and EU markets. While both regions aim to improve transparency and protect investors, their regulatory frameworks differ significantly in execution, oversight, and detailed requirements.
In the US, regulatory oversight is fragmented, with various agencies enforcing sector-specific rules. Meanwhile, the EU adopts a more centralized approach through the Securitisation Regulation, which establishes consistent standards across member states. These differences are particularly evident in areas like risk retention calculations - where the US uses fair value measurements and the EU relies on nominal value. Understanding these nuances is crucial for shaping market strategies and anticipating future trends.
Cross-border securitizations add another layer of complexity, requiring compliance with both regulatory systems. This dual framework impacts key elements such as sponsor definitions and retention methods, making in-depth regulatory knowledge a necessity for businesses aiming to succeed in these markets.
The financial implications of these regulations are substantial. As of December 2024, the European securitization market reached €1.15 trillion, with the EU/UK RMBS sector alone growing by 55% in 2024 to €44 billion in total issuance. These figures underscore the scale of opportunities for market participants who can navigate the regulatory landscape effectively.
Technology plays an increasingly important role in simplifying compliance. Advanced platforms now automate regulatory processes, provide real-time monitoring, and integrate AI to adapt to shifting rules. These innovations are becoming indispensable tools for staying ahead in a rapidly evolving environment.
Looking forward, both US and EU frameworks are set to evolve further. For example, the European Commission's June 2025 proposals and upcoming US climate disclosure rules will likely reshape reporting requirements. Financial institutions must remain flexible, combining regulatory expertise with cutting-edge technology to maintain compliance and seize market opportunities across both regions.
In this complex, fast-moving landscape, success hinges on mastering the balance between regulatory knowledge and agile, technology-driven compliance. Organizations that achieve this will be well-equipped to navigate the intricacies of structured debt reporting on a global scale.
The US and EU take notably different routes when it comes to risk retention for structured debt reporting. In the US, retention is determined using the fair value of assets. This method demands thorough disclosures both before and after the transaction closes. On the other hand, the EU calculates retention based on the nominal value of assets. While this makes the process simpler, it comes with stricter compliance rules.
One key distinction is that the EU allows specific exemptions, such as situations involving insolvency or the legal incapacity of the retainer. These scenarios aren't explicitly outlined in US regulations. These differences underscore the unique regulatory priorities in each region and emphasize the importance of tailoring compliance efforts to the rules of the jurisdiction where the debt instruments are issued.
Technology has made it much easier to navigate the complexities of structured debt reporting regulations in both the US and the EU. By automating workflows, standardizing data, and providing real-time monitoring, it helps cut down on manual work, reduces the chance of errors, and boosts overall efficiency.
In the EU, RegTech solutions play a key role in helping organizations stick to standardized templates, manage risks effectively, and align with frameworks like the EU's digital operational resilience guidelines. Meanwhile, in the US, AI-powered tools take on the heavy lifting by streamlining risk management and automating intricate reporting tasks. This approach not only simplifies compliance but also helps businesses save on costs.
By tapping into these technological advancements, institutions can ensure quicker and more precise adherence to structured debt reporting regulations in both regions.
The European Union's regulatory framework operates as a centralized system, providing uniform rules and oversight across all member states. This approach helps financial institutions cut down on inefficiencies, streamline their operations, and handle risks more effectively. By creating a unified regulatory environment, the EU promotes market stability and simplifies cross-border activities, making it much easier for institutions to navigate and operate within its borders.
On the other hand, the United States employs a more fragmented regulatory system, involving multiple agencies with overlapping jurisdictions. While this setup allows for more customized oversight, it can also lead to inefficiencies and make compliance more complex, especially for institutions juggling both domestic and international markets. Compared to the U.S., the EU’s integrated model offers a more straightforward and cohesive framework for managing structured debt reporting.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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