April 27, 2016 Newsletter
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April 27, 2016

Industry Jobs

SFIG Calendar



Advocacy Outlook

Industry News Highlights


Yesterday, April 26th, the Federal Deposit Insurance Corporation held an open board meeting at which they released the U.S. proposed net stable funding ratio (“NSFR”) requirements and related memo as part of their agenda. The Office of the Comptroller of the Currency also approved the proposal at this meeting.

The NSFR requirements are designed to reduce funding risk over the longer term by requiring banks to fund their activities with sufficiently stable sources of funding. They also require banks to maintain an amount of available stable funding over a prospective one-year period (the numerator) equal to its amount of required stable funding (the denominator). SFIG’s Regulatory Capital & Liquidity Committee will be commenting on this proposed rule. Comments are due by August 5, 2016.

The proposed NSFR requirements would be effective as of January 1, 2018. The proposal also includes revisions to definitions currently used in the Liquidity Coverage Ratio (“LCR”) rule. These revisions would become effective for purposes of the LCR rule at the beginning of the calendar quarter after finalization of the proposed rule, instead of on January 1, 2018.

Similar to the LCR, the proposed rule is generally negative for RMBS and ABS liquidity. The proposal is consistent with the final Basel guidelines in all relevant respects, except that private label MBS does not qualify as a level 2B liquid asset and therefore for a lower required stable funding amount. (Under the final Basel guidelines, private label RMBS is afforded a degree of liquidity treatment. ABS is not considered at all liquid.) The NSFR would apply to all U.S. bank and savings and loan holding companies with consolidated assets of $250 billion or more or $10 billion or more of on-balance sheet foreign exposures.

The proposed rule also contains a modified version of the NSFR that would apply to U.S. bank and savings and loan holding companies with consolidated assets of $50 billion or more and less than $10 billion of on-balance sheet foreign exposures. The modified NSFR would require available stable funding that at least equals 70 percent of a banking organization’s required stable funding amount.

SFIG submitted a comment letter in April of 2014 to the Basel Committee on Banking Supervision (“Basel”) in response to the Basel III NSFR consultative document. The final Basel III NSFR guidelines were published in October 2014. None of the comments made in SFIG’s 2014 response were reflected in the latest proposed NSFR rule.

The Board of Governors of the Federal Reserve Board will consider the proposed NSFR rule at its meeting on May 3, 2016.

If you are interested in joining our Regulatory Capital & Liquidity Committee, please contact Alyssa.Acevedo@sfindustry.org.

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Over the past several months, the concept of Distributed Ledger Technology or “Blockchain” has been described as a major “Game-Changer” for finance.

As part of SFIG’s commitment to both education and advocacy, we are pleased to launch a series of symposia to educate industry participants, and build an understanding of how blockchain works and how this technology may be applied to enhance and support the structured finance market.

Our first symposium will be education-based and will be held in Washington D.C. on May 24th, followed by a New York symposium in early June. Additional symposia will be scheduled for mid-September in both D.C. and New York. You can register for our D.C. May symposium here. New York symposium details will be released shortly.

In concert with our symposia series, SFIG is also pleased to announce the creation of our Blockchain Task Force, which will hold its first meeting in May. If you would like to be included in the task force, please email Alyssa.Acevedo@sfindustry.org.

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SFIG is still accepting nominations for its Board of Directors in anticipation of the June 2016 Board rotations. Eligibility for a position on the SFIG Board of Directors is limited to individuals employed by SFIG’s primary members. Members may nominate themselves or qualified industry participants.

SFIG’s Nominating Committee will review nomination submissions, consult with members and make recommendations to the current Board of Directors. The Nominating Committee is dedicated to selecting a balanced Board of Directors that is reflective of the membership and the industry at large, and is committed to working hard and advancing the principles of SFIG.

Board of Director terms are for two years. Nominations for the Board of Directors will be accepted until this Friday, April 29, 2016.

If you have any questions or require any clarification around the nominating process, please email Committees@sfindustry.org.

Click here to submit your nominations. Please note that the nomination form is open to registered members only. Members that have not yet registered can do so here.

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SFIG Positions

With SFIG continuing to expand its reach across new conferences and additional policy challenges, we are looking for additional talent.

If you are smart, enthusiastic, hard-working, and want to be part of a growing organization in a fun and supportive environment, please contact us at jobs@sfindustry.org or visit our website at www.sfindustry.org/jobs.

Opportunities exist for a variety of experience sets, ranging from Executive/Administrative Assistant to Director of Advocacy. We look forward to hearing from you! 

Industry Positions

Some of the latest industry positions available include:

Enterprise Sales T-REX 03-04-2016
Associate Director/Director - Structured Finance - Model Management Fitch Ratings 02-29-2016
Research Analyst PeerIQ 02-25-2016
Credit Quant PeerIQ 02-22-2016
Mid-Level Corporate Trust Associate K&L Gates LLP 02-22-2016
Senior Analyst, Consumer ABS Kroll Bond Rating Agency 02-04-2016
Analyst, Financial Institutions Kroll Bond Rating Agency 02-03-2016
Associate Director, Structured Finance - Toronto Standard & Poor's 01-29-2016

Attorney- Project Finance/Corporates

Kroll Bond Rating Agency 01-28-2016

Analyst – CMBS Analytics

Kroll Bond Rating Agency 01-28-2016

Please visit our Jobs page for a full listing of available positions.

For questions about positions at SFIG, please contact Jobs@sfindustry.org. For questions about the website jobs portal, please contact Website@sfindustry.org.

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  • THURSDAY, April 28, 2016
    10:00 a.m. – 11:00 a.m. (ET)
  • THURSDAY, May 5, 2016
    10:00 a.m. – 11:00 a.m. (ET)

TUESDAY, May 3, 2016
11:00 a.m. – 12:00 P.m. (ET)


WEDNESDAY, May 4, 2016
9:00 a.m. – 10:00 a.m. (ET)

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THURSDAY, May 12, 2016
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave NW
Washington, DC
Registration available here.

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MONDAY, May 16, 2016 – TUESDAY, May 17, 2016
Grand Hyatt New York
New York, NY
Registration available here.

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TUESDAY, May 24, 2016
1900 K Street NW
Washington DC 20006
Registration available here.

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TUESDAY, May 31, 2016 – WEDNESDAY, June 1, 2016
Hyatt Regency Toronto
Toronto, Ontario
Registration available here.

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TUESDAY, June 14, 2015 – THURSDAY, June 16, 2016
The Barcelona International Convention Centre
Barcelona, Spain
Registration available here.

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If you would like to participate in the work SFIG is undertaking through our committees as highlighted below, please e-mail Committees@sfindustry.org. For specific inquiries on any of SFIG’s advocacy efforts, please contact the staff member listed for the related project.

SFIG’s Marketplace Lending Committee was established in August 2015, as an SFIG participant committee and is open to all SFIG members who have a legitimate interest in marketplace lending. The committee was formed with two primary intentions: 1) to work with members involved in marketplace lending to educate the industry as a whole, with a particular focus on the securitization of assets generated through that lending channel; and 2) to determine appropriate securitization-specific policy and engage in related advocacy, leveraging SFIG’s prominence and experience across all asset classes to support the continued responsible growth of securitization in marketplace lending.

The committee recently launched its “Best Practices” initiative to establish industry consensus and provide recommendations around one or multiple accepted approaches. The five established Best Practices work streams are 1) Data & Reporting 2) Representations & Warranties 3) Regulatory 4) Operational Considerations and 5) Enforcement.

The committee previously commented on the Treasury Department's Request for Input on Online Marketplace Lending on September 30th.

SFIG’s Student Loan Committee recently responded to Fitch’s proposed amendments to FFELP student loan ABS rating methodology. The committee also submitted a response to the Proposed Changes to Moody’s Approach to Rating Securities Backed by FFELP Student Loans this past October.

To join SFIG’s Student Loan Committee and learn more, please contact Alyssa.Acevedo@sfindustry.org.

The RMBS 3.0 Task Force released its Third Edition RMBS 3.0 Green Papers in November 2015. The task force has continued its efforts to address key issues specific to private label mortgage securities through work-streams relating to (1) Representations, Warranties, and Repurchase Enforcement; (2) Due Diligence, Data, and Loan-Level Disclosure; (3) Role of Transaction Parties; and (4) Bondholder Communications. We encourage members to participate in any or all of the working groups to contribute towards the mission of RMBS 3.0. For its 2016 agenda, the task force will address topics including the inclusion of an independent Deal Agent in transactions, Bondholder Communications, Data and Loan-Level Disclosure, Repurchase Enforcement, and Settlements, as well as undertake a review of the previously published Green Papers.

For additional information on RMBS 3.0, please contact Amanda.Bateman@sfindustry.org.

SFIG, through its GSE Reform Task Force, along with several other trade associations, submitted a letter to the FDIC, Fed and OCC regarding the effect of homeowner’s association ‘super-liens’ on private-label RMBS and whole loan transactions. The task force also submitted comments on FHFA’s update to the single security initiative on October 7, 2015. The task force is expecting to receive an update from the SFIG participants on the Industry Advisory Group for the Common Securitization Platform and Single-Security following its second meeting on December 7th. The task force has also formed policy positions on the Carney-Delaney-Himes GSE Reform bill and updated its briefing book to support its advocacy efforts. With the release of the bill, SFIG staff also updated its GSE Reform Legislative Comparison, which analyzes key provisions in the five most recent housing finance reform bills.

To join SFIG’s GSE Reform Task Force and learn more, please contact Amanda.Bateman@sfindustry.org.

The Mortgage Loan-Level Disclosure Task Force is studying the recent Regulation AB II release of Schedule AL and comparing it to SFIG’s Schedule L submission to the Securities and Exchange Commission in February 2014. SFIG also continues to have weekly Mortgage Industry Standards Maintenance Organization calls to go through data elements that lenders should deliver in securitizations. The task force will also be conducting an analysis of the data elements included in SFIG’s Schedule L submission in order to determine any privacy concerns.

Please contact Amanda.Bateman@sfindustry.org for additional information on SFIG’s work on this topic.

The Volcker Task Force has been working with SFIG’s various asset class and legal counsel committees to identify areas within the Volcker Rule in need of clarification, particularly questions regarding covered funds and the loan securitization exemption.

Please contact Alyssa.Acevedo@sfindustry.org to participate on the Task Force.

The Risk Retention Industry Guide Working Group recently launched its interim Industry Guide, ahead of the RMBS compliance date, focused on issues either relevant to all asset classes or specific to RMBS. The Working Group continues to work on a final guide focused on creating best practices and developing consensus positions around several areas within the Credit Risk Retention final rule.

Please contact Alyssa.Acevedo@sfindustry.org with any questions.

SFIG’s Chinese Market Committee recently completed their White Paper, A Comprehensive Guide to U.S. Securitization, for Chinese regulators and the Chinese Securitization Forum to educate them on the U.S. securitization landscape. The committee also continues to hold discussions with a focus on SFIG’s partnership with the CSF, potential upcoming educational discussions and the sharing of recent market developments in China.

If you would like more information on SFIG’s work with respect to Chinese securitization, please contact Alyssa.Acevedo@sfindustry.org.

The Regulation AB II Task Force has been focused on the disclosure and offering process requirements within the final rule. Asset specific work streams have been formed to develop comment letters on the outstanding proposals within the final rule and the Task Force submitted the first part of its comment letter this past June. SFIG submitted a supplemental comment letter covering credit card and equipment floorplan asset classes on January 12, 2016.  Future discussions across asset class committees and the Regulation AB II Task Force will focus on the remaining outstanding proposed rules, including potentially requiring issuers to provide the same disclosure for Rule 144A offerings as required for registered offerings.

SFIG members who are interested in joining this task force or asset specific committees should contact Alyssa.Acevedo@sfindustry.org

The Regulatory Capital and Liquidity Committee will be developing a comment letter to the U.S. proposed net stable funding ratio (“NSFR”) requirements. The committee also recently submitted a response to Basel’s Consultative Document regarding Capital Treatment for STC Securitisations and will be addressing industry concerns related to the Federal Reserve Board’s Final Rule on the Liquidity Coverage Ratio (“LCR”). SFIG recently testified before Congress, focusing on global regulatory issues, including LCR, that affect lending across all asset classes.

To become involved in SFIG’s advocacy on the final LCR or NSFR rules, please contact Alyssa.Acevedo@sfindustry.org.

The Derivatives in Securitization Task Force obtained no-action relief from the CFTC giving swap dealers comfort that the CFTC would not take enforcement action against swap dealers that did not comply with certain CFTC Regulations when taking actions in response to the credit ratings downgrade of a counterparty to a legacy swap. The relief applies to swaps with SPVs that were in existence prior to October 10, 2013. The task force also commented on the CFTC’s proposal on margin requirements for uncleared swaps, as well as the prudential regulators’ proposal regarding margin and capital requirements for covered swap entities. In October 2015, the prudential regulators approved a Joint Final Rule on Swap Margin Requirements. In November 2015, the CFTC issued their final rule regarding margin requirements for uncleared swaps for swap dealers and major swap participants.

The High Quality Securitization ("HQS”) Task Force recently submitted a response to Basel’s Consultative Document regarding Capital Treatment for STC Securitisations. The task force previously responded to the European Commission’s consultation on an EU framework for simple, transparent and standardized securitization on May 12, 2015. The task force also previously responded to the BCBS-IOSCO consultation on its criteria for identifying simple, transparent and comparable securitizations. SFIG’s comments were built off of those sent to the European Banking Authority on January 14th (available here) regarding its proposed criteria and to the European Central Bank and Bank of England last summer (available here) regarding the development of a sustainable securitization market in Europe. SFIG recently testified before Congress, focusing on global regulatory issues, including HQS, that affect lending across all asset classes.

To join the HQS Task Force, please contact Alyssa.Acevedo@sfindustry.

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According to a recent Reuters article, investors are turning to CMBS derivatives for liquidity as cash bond supply has sharply dropped in recent months due to market volatility. The article cites data from the Depository Trust & Clearing Corporation, which shows outstanding gross notional of derivative CMBS contracts have grown by $40 billion from a year ago to $181 billion as of April 15, 2016. As a substitute for cash bonds, money managers have selectively bought synthetic indices, which offer investors a seamless way to trade notes referencing existing CMBS without the hassle of finding cash bonds through a dealer. As stated in the article, “liquidity in CMBS bonds has fallen drastically as volatility, cuts to staff at trading desks and tough new capital rules curbed the ability of large banks to trade.”

According to the Federal Reserve Bank of New York, primary deal inventory of CMBS, which was $10 billion this time last year, has shrunk to $6.5 billion as of April 6, 2016.

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Moody's says that the Chinese securitization market could gain valuable traction once a number of hurdles are cleared. Barriers to the market's growth were discussed during the China Securitization Forum Annual Conference in Beijing from April 7-9, 2016.

"China's economy is gradually transforming into one that is driven by consumption rather than exports," says Jerome Cheng, a Moody's Senior Vice President. "As a result, consumption-related assets such as credit card receivables will become abundant in the market."

At the end of 2015, aggregate credit card limits in China totaled RMB7.08 trillion, of which RMB3.09 trillion were outstanding, according to the People's Bank of China. The amount of outstanding receivables had increased 32.05 percent over 2014, signifying the ABS potential in the market.

In order for China to aspire to an established and scalable market similar to the U.S., a number of building blocks must be in place, according to Moody's. These include improving standardization and transparency in ABS, which the agency says are crucial for enhancing not only the initial credit analysis of securitizations at closing, but also the ongoing monitoring of outstanding deals.

Other proposed advancements include greater liquidity in the secondary market, a well-established investor base to ensure the placement of ABS, repeat issuers that provide ongoing and consistent issuance, and the necessity of lower funding costs, alternative funding sources and better investment returns.

However, a critical issue that still persists in the market is the availability of suitable assets to securitize, as pointed out by Moody’s. On the investor side, Moody's believes that a diversification of the investor base will be required to redistribute the risk, as banks are both the main issuers and investors in securitizations in China.

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Recent student loan securitizations suggest that the market is beginning to thaw, according to an American Banker article. Threats of steep downgrades over the past year have decreased investor demand for bonds backed by Federal Family Education Loan Program (“FFELP”) loans. Over the past two months, however, $1.597 billion of bonds backed by FFELP loans have been sold.

According to American Banker, Moody's and Fitch Ratings have yet to take any ratings actions on the securities under review; both are in the process of revising their criteria for rating FFELP bonds to account for the slower rate at which borrowers are repaying loans.

To read SFIG’s response to Moody’s revised criteria proposal, please see here. To read our response to Fitch’s revised criteria proposal, please see here.

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SFIG has a number of Committees and Task Forces meeting and working on many topics of interest to the securitization industry. Please email us for more information, including how to join.

SFIG is pleased to share this edition of its newsletter with our members, as well as our supporters in the structured finance community. To ensure that you receive future editions of the newsletter, please visit our website or email us to learn more about membership opportunities.

Contact Information

Richard Johns Executive Director

Kristi Leo Investor Relations

Sairah Burki Senior Director, ABS Policy

Michael Flood Director, Advocacy

Dan Goodwin Director, Mortgage Policy

Jennifer Wolfe ABS Policy Manager

Hua Liu Communications & Social Media Manager

Alyssa Acevedo Senior Analyst, ABS Policy

Amanda Bateman Senior Analyst, MBS Policy

Jennifer Serpas Office Manager

Sarah Clarke Events Coordinator

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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