(8)In its ‘Report on STS framework for synthetic securitisation’ of 6 May 2020, EBA recommended that a specific framework be introduced for simple, transparent and standardised (STS) on-balance sheet securitisations. Given the lower agency risk and modelling risk of an STS on-balance sheet securitisation compared with a non-STS synthetic securitisation, an appropriate risk-sensitive calibration of own funds requirements for STS on-balance sheet securitisations, as considered in that report, should be introduced, taking into account the current preferential regulatory treatment of senior tranches of SME portfolios. EBA should be mandated to monitor the functioning of the STS on-balance sheet securitisation market. Greater recourse to the STS on-balance sheet securitisation promoted by a more risk sensitive treatment of the senior tranche of such securitisations would free up regulatory capital and could ultimately further expand the capacity of institutions to lend in a prudentially sound manner.