News Centre

SIFMA Statement On SEC Proposal On Conflicts Of Interest In Securitizations

Date 25/01/2023

SFMA today issued the following statement from president and CEO Kenneth E. Bentsen, Jr. on the proposed rule from the Securities and Exchange Commission (SEC), “Prohibition Against Conflicts of Interest in Certain Securitizations”:

Statement On Proposed Rule: “Prohibition Against Conflicts Of Interest In Certain Securitizations”, SEC Commissioner Hester M. Peirce, Jan. 25, 2023

Date 25/01/2023

Thank you, Chair Gensler. I support putting out a new proposal as a step toward compliance with a more-than-decade-old mandate from Congress, but I have numerous questions about its content. The proposal should narrowly implement this mandate given the admitted lack of problems in the market. The release acknowledges that “[c]urrent market practices may be generally consistent with the re-proposed rule requirements as a result of market participants’ current compliance with the existing rules and reputational incentives.”

Statement On The Prohibition Against Conflicts Of Interest In Certain Securitizations Re-Proposal, SEC Commissioner Caroline A. Crenshaw Jan. 25, 2023

Date 25/01/2023

The Commission is proposing to implement Section 621 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Even though it has been said frequently, I’d like to commend the work of so many tireless advocates, public servants, and elected officials in shepherding through a statute to protect American investors and their families, and to reduce the likelihood of a recurrence of the events that led up to the Global Financial Crisis of 2007-2008. And I also want to applaud the Commission staff for ensuring that Dodd-Frank, and all of our relevant statutes, are faithfully and meaningfully implemented.

CFTC Commissioner Goldsmith Romero To Participate In The American Bar Association Derivatives And Futures Law Committee Winter Meeting

Date 25/01/2023

SEC Proposes Rule To Prohibit Conflicts Of Interest In Certain Securitizations

Date 25/01/2023

The Securities and Exchange Commission today proposed a rule to implement Section 27B of the Securities Act of 1933, a provision added by Section 621 of the Dodd-Frank Act. The rule is intended to prevent the sale of asset-backed securities (ABS) that are tainted by material conflicts of interest. Specifically, the rule would prohibit securitization participants from engaging in certain transactions that could incentivize a securitization participant to structure an ABS in a way that would put the securitization participant's interests ahead of those of ABS investors. The Commission originally proposed a rule to implement Section 27B in September 2011.

BIS: Global Financial Cycle And Liquidity Management

Date 25/01/2023

Summary

Focus 

The global financial cycle exposes emerging market economies to large fluctuations in capital inflows that tend to destabilise asset prices and macroeconomic conditions. In recent years, an influential line of research has advocated using capital controls to reduce the volatility of capital inflows and enhance macroeconomic resilience.

BIS - Theory Of Supply Chains: A Working Capital Approach

Date 25/01/2023

Summary

Focus 

Production takes time, especially when conducted through long supply chains. Working capital in the form of inventories and receivables bridges the timing mismatch between incurring costs and receiving cash from sales. This paper lays out a theory of supply chains where financial conditions play a pivotal role in the determination of the length of supply chains.

Statement On Prohibiting Conflicts Of Interest In Certain Securitizations, SEC Commissioner Jaime Lizárraga, Jan. 25, 2023

Date 25/01/2023

While “asset-backed securities” may not be a household term, it has direct implications for millions of working households. So much so that in both 2008 and during the Covid-19 pandemic, the Federal Reserve set up emergency loan facilities to prevent interruptions in this market.

BIS: Forecasting Swap Rate Volatility With Information From Swaptions

Date 25/01/2023

Summary

Focus 

We calculate the swap rate model-free implied volatility from over-the-counter swaption quotes for swap rates with a wide cross section of tenors and with a variety of times to expiration. We examine the predictive power of the swap rate model-free implied volatility on future realised volatility of swap rates and compare the in-sample and out-of-sample predictability of the model-free implied volatility with other commonly used predictors.

Statement On Prohibiting Conflicts Of Interest In Securitizations, SEC Chair Gary Gensler, Jan. 25, 2023

Date 25/01/2023

Today, the Commission is considering whether to re-propose rules to prohibit a range of market participants that sell or sponsor asset-backed securities (ABS) from taking positions against those very products. I am pleased to support this re-proposed rule as it fulfills Congress’s mandate to address conflicts of interests in the securitization market, which contributed to the 2008 financial crisis.