July 6, 2016 Newsletter
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July 6, 2016

Industry Jobs

SFIG Calendar



Advocacy Outlook

Industry News Highlights


Today, July 6th, SFIG submitted comments, drafted by Mayer Brown, to the Basel Committee on Banking Supervision (“BCBS”) regarding proposed revisions to the Basel III leverage ratio framework. SFIG’s letter provided comments on the BCBS Consultative Document. According to the BCBS, this document “proposes a set of changes to the standard released in January 2014. The proposed changes to the framework are an important element of the regulatory reform programme that the Basel Committee has committed to finalise by end-2016.”

If you would like to join SFIG’s Regulatory Capital and Liquidity Committee, please contact Alyssa.Acevedo@sfindustry.org.

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The Tax Policy Committee of SFIG submitted a comment letter today, drafted by Mayer Brown, to the IRS regarding the income tax regulations (the “Proposed Regulations”) that were proposed under section 385 of the Internal Revenue Code of 1986, as amended on April 4, 2016. The Committee is concerned that certain provisions of the Proposed Regulations may introduce risk of an adverse structural tax consequence or uncertainty as to the proper tax treatment of securitization notes, in addition to the overbreadth of the rules. SFIG’s letter provided comments requesting changes or clarifications to the Proposed Regulations to ensure that their potential application to securitization transactions does not have a market-chilling effect on the real economy.

The Treasury Department will hold a hearing of the Proposed Regulations on July 14th

If you would like to join SFIG’s Tax Policy Committee, please contact Amanda.Bateman@sfindustry.org.

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SFIG is pleased to announce the addition of two new staff members. With SFIG continuing to expand its reach across new conferences and additional policy challenges, the organization has been growing at a rapid rate over the past year. Now, we are welcoming two new staff members into the fold. Please help us say hello to Marshall and Robert!

Marshall Bornemann is a Policy Analyst at SFIG, reporting to the Director of Mortgage Policy, Dan Goodwin. In this capacity, Mr. Bornemann is responsible for reviewing, summarizing, and recommending policies beneficial to the SFIG’s more than 350 institutional members.

Prior to joining SFIG, Mr. Bornemann interned for the Financial Services Roundtable, where he assisted in membership development and event management. In addition to his recruitment efforts, Mr. Bornemann assisted the Roundtable’s government affairs division, and attended briefings covering the U.S. Department of Labor’s fiduciary standard. Mr. Bornemann has a working knowledge of legislative procedure, making him a key asset for members looking to educate legislators and agency personnel on the economic benefits of securitization.

Mr. Bornemann is a 2014 graduate of the American University School of International Service, where he specialized in international economics, business, and politics. While at SFIG, Mr. Bornemann hopes to attend the Johns Hopkins University School of Advanced International Studies. Mr. Bornemann, a native of Washington, D.C., enjoys running, reading, discovering new craft beers, and playing billiards.

Robert Robilliard is a Data and Policy Analyst at SFIG, reporting directly to the Director of Advocacy, Tom McCrocklin. He is recent graduate of American University’s School of Public Affairs. There he earned his BA in Political Science and Public Policy.

While working towards completing his degree, Mr. Robilliard spent two semesters interning on Capitol Hill. As an intern he worked directly with legislative staff, researching and writing on financial regulatory policy. Before coming to Washington to attend American University, he worked for a year managing call-time and organizing fundraising efforts on the Emily Cain for Congress Campaign during the 2014 election.

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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, hard-working, enthusiastic, 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 Policy Analyst to MBS/CMBS Policy Manager. We look forward to hearing from you!

Industry Positions

Some of the latest industry positions available include:

Senior Manager, Securitization Platform: Liquidity and Funding Manager – 126543BR TD Bank 06-24-2016
Principal - Structured Product Group (RMBS) PGIM 05-04-2016
Director/Senior Director - Data and Operations Leader Fitch Ratings 05-03-2016
Director/Senior Director - Research and Criteria Leader Fitch Ratings 05-03-2016
Director/Senior Director - Asset Manager Leader Fitch Ratings 05-03-2016

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.

Current members are encouraged to advertise open positions within their company on SFIG's website by filling out the form here.

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THURSDAY, July 7, 2016
11:00 a.m. – 12:00 p.m. (ET)

Note: We are convening a call to gauge membership’s interest in responding to the Request for Input from the FHFA. The comment period is relatively short so if you cannot attend but want to weigh in please email Daniel.Goodwin@sfindustry.org.


Monday, July 11, 2016
2:00 p.m. – 3:00 p.m. (ET)


Monday, July 11, 2016
2:00 p.m. – 3:00 p.m. (ET)


Tuesday, July 12, 2016
11:00 a.m. – 12:00 p.m. (ET)


WEDNESDAY, July 13, 2016
2:00 p.m. – 3:00 p.m. (ET)


THURSDAY, July 14, 2016
10:00 a.m. – 11:00 a.m. (ET)

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MONDAY, August 1, 2016 – FRIDAY, August 5, 2016
Registration forthcoming

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SUNDAY, September 18, 2016
3:00 p.m. – 5:00 p.m. (ET)
Eden Roc Hotel, Ocean Garden
Miami Beach, FL

Registration forthcoming

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SUNDAY, September 18, 2016 – TUESDAY, September 20, 2016
The Fontainebleau
Miami Beach, FL
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 responded to Fitch’s proposed amendments to FFELP student loan ABS rating methodology earlier this year. 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, recently met with the FHFA, Fannie Mae and Freddie Mac to get an update on the transition to a Single Security issuance. The transition was characterized as moving ahead on schedule but with a lot of work still to do. The task force has formed policy positions on the Carney-Delaney-Himes GSE Reform bill, the PATH Act, and other GSE reform proposals. Please see the 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 will soon begin its review of the Mortgage Industry Standards Maintenance Organization’s (“MISMO”) work to map the data elements that lenders should deliver in securitizations per the recent Regulation AB II release of Schedule AL. The requirements will come into effect in November 2016, and SFIG has participated in weekly conference calls with MISMO for the last 18 months in an effort to standardize disclosure by that time. SFIG encourages subject-matter experts from member organizations to participate in its review—which will be conducted jointly by this task force and the RMBS 3.0 Due Diligence, Data and Disclosure Working Group—so the work can be adopted as an industry-wide standard.

Members interested in participating should contact Amanda.Bateman@sfindustry.org.

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 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 completed their White Paper, A Comprehensive Guide to U.S. Securitization, in April 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 in June of 2015. SFIG submitted a supplemental comment letter covering credit card and equipment floorplan asset classes on January 12, 2016 and another supplemental comment letter regarding asset-level information for student loans on June 15, 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 comments to the Federal Reserve Board’s (“FRB”) proposal regarding Single-Counterparty Credit Limits, and before that, submitted a response to Basel’s Consultative Document regarding Capital Treatment for STC Securitisations. The committee will be addressing industry concerns related to the FRB’s Final Rule on the Liquidity Coverage Ratio (“LCR”). SFIG testified before Congress in February 2016, 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 testified before Congress in February 2016, focusing on global regulatory issues, including HQS, which affect lending across all asset classes.

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

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According to a recent Bloomberg article, Goldman Sachs Group expects Brexit to have a limited impact on the US economy.

“The UK is not a global economic bellwether, and hence any economic activity slowdown should have limited impact,” according to Rohan Khanna, a London-based Interest-Rates Strategist at Goldman Sachs. With regard to US monetary policy, the bank is assigning “a cumulative two-thirds probability of at least one hike by year-end.” 

Ms. Khanna went on to explain that Brexit “is unlikely to stop the hiking cycle given the cyclical position of the US economy,” and “(w)ith above trend growth, the US is moving swiftly towards full-employment.”

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Private issuance in the European ABS market has exceeded public deal volumes, according to a recent Bloomberg article. As reported, data from the first half of 2016 shows that “private bilateral sales of the bonds, which are typically backed by collateral such as car loans or mortgages, now outstrip public sales to investors.” The research cited was conducted by Bank of America analysts, led by Alexander Batchvarov. The retained transactions in Europe rose to “78 billion ($87 billion) in the first six months of the year, which is more than double the 30 billion euros sold in the same period of 2015, according to Bank of America data.” However, in the public ABS market “new-issue supply totaled just 41 billion euros, or roughly half the volume recorded a year earlier.”

The article explains that the decrease in public issuance is because “banks are using [securitization] to manage risks and offload assets in private transactions that are typically unrated and where transaction data is often not available,” and that the increase in private deals is due in part to ”securitization of whole loan portfolios including non-performing loans,” according to Bank of America. Finally, the use of synthetic securitizations “are also said to be growing in favor as banks seek to bolster their balance sheets”. Mr. Batchvarov wrote that "discussions with market participants suggest that the volume may be (much) larger," and that "the revival of synthetic securitisations speak[s] to the need of the banks to manage their capital and credit risk of their balance sheet, but apparently this is now done through bilateral transactions, mostly not rated, and rarely seen."

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The recent EU Parliament’s Committee on Economic and Monetary Affairs proposal to increase the EU risk retention requirement may block US CLO managers from selling funds, according to a recent Reuters’ article.

Issuance of US CLOs is $25.7 billion this year, down 55 percent from the $56.9 billion the same time last year, due in part to the upcoming US risk retention rule that will require managers to hold 5 percent of their fund. According to Reuters, limiting access to European investors may push volume lower, and fewer CLOs will decrease the appetite for the $880 billion US leveraged loan market.

Under the new proposal, US CLOs would not be considered EU risk-retention compliant and US entities would be prohibited from investing in European CLOs, according to James Warbey, Partner at Milbank, Tweed, Hadley & McCloy. “A new proposal would require that only European-regulated institutional investors can invest in EU securitizations, and only European-regulated entities can be considered an originator or sponsor, which may have large implications for the U.S. market.”

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According to a recent Wall Street Journal article, the EU is proposing an expansion of its anti-money-laundering rules to cover virtual currencies in order to counter terror financing and tax evasion. The proposal also seeks to strengthen oversight of bank accounts and increase the transparency regarding ownerships of trusts. Virtual currency platforms, such as bitcoin, would also be brought under anti-money-laundering rules that will come into effect by the end of this year. These platforms would also have to verify the identity of users and monitor transactions.

The proposal will now be submitted to the European Parliament for consultation and adoption.

If you would like to join SFIG’s Blockchain Task Force, please contact Alyssa.Acevedo@sfindustry.org.

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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

Dan Goodwin Director, Mortgage Policy

Tom McCrocklin Director, Advocacy

Jennifer Wolfe Manager, ABS Policy

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

Dani Hernandez Executive Administration

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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