March 30, 2016 Newsletter
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March 30, 2016
 
 
SFIG News

Industry Jobs

SFIG Calendar

Meetings

Events

Advocacy Outlook

Industry News Highlights

 
SFIG NEWS
SFIG DELEGATION TO PARTICIPATE IN 2016 CHINA SECURITIZATION FORUM ANNUAL CONFERENCE

Next week, from April 7th-9th, a delegation consisting of several SFIG members and staff will attend the 2016 Annual Conference of the China Securitization Forum (“CSF”) at the China National Convention Center in Beijing.

As reported last week, SFIG’s delegation will be playing a significant role at the CSF conference. In addition to a formal presentation of SFIG’s White Paper on Securitization and an education panel covering the same subject, many of the SFIG delegation will be participating in various conference panels together with meetings with local regulators.

SFIG represented panels will include:

  • Key Components to Ensuring a New Market has Liquidity
  • Introduction of How U.S. Securitization Works: CLOs
  • U.S. Securitization Structures and Comparison of U.S. and China Deals
  • The Value of Industry Trade Organizations
  • Global RMBS Comparison
  • GMAC-SAIC Overview of Auto with a Revolving Structure
  • The Importance of Securitization Finance in the Real Economy
  • Lessons Learned from Overseas RMBS Securitization Transactions
  • Lessons Learned from International Market Regulation
  • The Significance of Securitization to China's Financial Reform and the Internationalization of RMB

If you are interested in learning more about the conference, please click here. If you would like to join SFIG’s Chinese Market Committee, please contact Alyssa.Acevedo@sfindustry.org.

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INDUSTRY JOBS

SFIG currently has open positions for:

  • Advocacy Manager: will be an integral member of SFIG staff, being second-in-command of the association’s Advocacy department. The successful candidate will design and execute advocacy strategies for SFIG’s policy priorities and support the association’s advocacy efforts through development and growth of its political action committee. Additional information on the position, as well as a link to the application, is available here.

  • Data/Policy Analyst: will help support group-wide strategy efforts and initiatives as they relate to the association’s database and various policy requirements. The Analyst will also support SFIG’s advocacy efforts through development of a political action committee database. Additional information on the position, as well as a link to the application, is available here.

  • Executive/Administrative Assistant: will be responsible for supporting the Executive Director and Directors of Policy and Advocacy while directing overall front office activities, including the reception area, mail, calendar coordination, meeting set-up, purchasing requests and overall office management. Additional information on the position, as well as a link to the application, is available here.

Some of the latest industry positions available include:

JOB TITLE COMPANY POSTING DATE
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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SFIG CALENDAR
MEETINGS
BIWEEKLY RISK RETENTION INDUSTRY GUIDE WORKING GROUP CALL

TUESDAY, April 5, 2016
11:00 a.m. – 12:00 p.m. (ET)

 
 
MONTHLY CHINESE MARKET COMMITTEE CALL

WEDNESDAY, April 6, 2016
9:00 a.m. – 10:00 a.m. (ET)

 
 
WEEKLY CREDIT CARD ISSUER COMMITTEE CALL

THURSDAY, April 7, 2016
10:00 a.m. – 11:00 a.m. (ET)

 
 
RESIDENTIAL MORTGAGE ISSUER COMMITTEE MONTHLY CALL

MONDAY, April 11, 2016
2:00 p.m. – 3:00 p.m. (ET)

 
 
MASTER SERVICER AND SERVICER SUBCOMMITTEE CALL

TUESDAY, April 12, 2016
1:00 p.m. – 2:00 p.m. (ET)

 
 
RMBS 3.0 DUE DILIGENCE, DATA AND DISCLOSURE MONTHLY CALL

THURSDAY, April 14, 2016
2:00 p.m. – 3:00 p.m. (ET)

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EVENTS
CHINA SECURITIZATION FORUM ANNUAL CONFERENCE 2016

THURSDAY, April 7, 2016 - SATURDAY, April 9, 2016
China National Convention Center
No. 7 Tianchen East Road, Chaoyang District
Beijing, China
Registration available here.

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IMN’s SUNSHINE BACKED BONDS CONFERENCE

THURSDAY, April 21, 2016
Marriott New York Downtown
New York, NY
Registration available here.

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IMN’s INVESTORS CONFERENCE ON CLOs AND LEVERAGED LOANS

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

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SFIG & IMN's STRUCTURED FINANCE CANADA 2016

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

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IMN’s GLOBAL ABS 2016 CONFERENCE

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

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ADVOCACY OUTLOOK

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 continues to hold discussions with a focus on SFIG’s partnership with the Chinese Securitization Forum, 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 recently submitted a response to Basel’s Consultative Document regarding Capital Treatment for STC Securitisations. The committee is also addressing industry concerns related to the Federal Reserve Board’s Final Rule on the Liquidity Coverage Ratio (“LCR”). This committee will also develop a comment letter when U.S. regulators release their proposed Net Stable Funding Ratio (“NSFR”). 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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INDUSTRY NEWS HIGHLIGHTS
CENTRAL BANK GOVERNOR ZHOU SAYS NOT TO WORRY ABOUT ABS IN CHINA

The ABS market is quite small in China and risks can be prevented through better oversight and transparency, Central Bank Governor Zhou Xiaochuan said during a press conference on March 12th, on the sidelines of the National People’s Congress.

Concern is rising in China about bad loans amid the country’s economic slowdown, and that ABS might transfer risks in non-performing assets to other market. Zhou tried to dispel concerns related to the risks of a booming ABS market by saying this is a relatively new area China is exploring but that it has learned important lessons from the latest global financial crisis. China has adopted a cautious approach and is looking at sound projects with controlled risk, he said.

In China, ABS sales surged 41 percent last year to 397 billion yuan ($61 billion), according to Bloomberg-compiled data, and yet the volume was only a fraction of the U.S. market.

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CFTC COMMISSIONER THINKS AGENCY SHOULD REVISIT RULES FOR BLOCKCHAIN

J. Christopher Giancarlo, a Commissioner of the Commodity Futures Trading Commission (CFTC) said yesterday that “he believes the government agency should reexamine rules as necessary to foster innovation with blockchain technologies.” The remarks were part of his keynote address at the DTCC Blockchain Symposium in New York City, and reported on Coindesk.com.  

He gave his views on the “implications for blockchain and distributed ledgers for regulators” and “went so far as to suggest that regulators such as the CFTC, the primary US regulatory for options and futures markets, could drive jobs related to emerging technologies like blockchain to friendlier jurisdictions should they fail to adopt a ‘do no harm’ strategy as they did for the early Web.”

He stated: “I believe the CFTC should revisit this rule … promote the efficiency and accuracy of recordkeeping … and examine as necessary rules that may inhibit distributed ledger technology innovation." He also referenced actions being taken abroad by the “International Organisation of Securities Commissions and Japan’s Financial Services Agency, which he lauded as having progressive stances on the technology.”

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FED MAY BE SPLIT ON ASSESSMENT OF U.S. ECONOMY

In a recent speech, “The Outlook, Uncertainty, and Monetary Policy,” Federal Reserve (“Fed”) Chair Janet Yellen stated that global economic and financial uncertainty, driven largely by the developments in China and the collapse in oil prices, has amplified the risk to the U.S. economy and justified a slower path of an interest-rate increase.

“Given the risks to the outlook, I consider it appropriate for the committee to proceed cautiously in adjusting policy,” Ms. Yellen said but did not give details about the timing of the next rate increase. “I anticipate that the overall fallout for the U.S. economy from global market developments since the start of the year will most likely be limited, although this assessment is subject to considerable uncertainty.”

According to a recent Wall Street Journal article, Ms. Yellen’s careful stance contrasts with recent statements from some Fed officials who have adopted a more upbeat tone. Speaking in Singapore hours before Ms. Yellen was to deliver her speech, San Francisco Fed President John Williams delivered a more positive assessment of the U.S. and world economies.

“I don’t see a looming global crisis,” Williams said. “If we see inflation continuing to consistently pick up, that would argue for a slightly steeper path for [monetary] policy.”

These divergent messages suggest a split among Fed policy makers that could color the path of rate increases, according to the Wall Street Journal.

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BCBS PROPOSES MEASURES TO REDUCE VARIATION IN CREDIT RISK-WEIGHTED ASSETS

Last Thursday, March 24th, the Basel Committee on Banking Supervision (“BCBS”) released a consultative document entitled “Reducing variation in credit risk-weighted assets – constraints on the use of internal model approaches.”

According to the BCBS, the document introduces a proposed set of changes to the Basel framework's advanced internal ratings-based approach and the foundation internal ratings-based approach. The proposed changes aim to: (i) reduce the complexity of the regulatory framework and improve comparability; and (ii) address excessive variability in the capital requirements for credit risk.

Under the proposal, banks would have to use a more conservative standard approach set by regulators and would not be allowed to use models for credit valuation adjustment risks from counterparties to their derivatives trades.

Reuters recently reported that banks fear a “Basel IV,” or step change in capital requirements, but the BCBS has said the proposed rules would not significantly increase overall capital requirements.

Comments on this consultative document are due by June 24, 2016 and the BCBS is aiming to finalize the rules by the end of this year.

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FHFA DIRECTOR WATT SAYS ANNOUNCEMENT ON PRINCIPAL REDUCTION STRATEGY IMMINENT

Last Tuesday, March 22nd, the Federal Housing Finance Agency (“FHFA”) Director Mel Watt said the agency will announce within the next 30 days whether it will endorse a principal reduction strategy for the government sponsored enterprises (“GSEs”) Fannie Mae and Freddie Mac. According to a recent article in National Mortgage News, Watt told audiences, “We are, however, drawing close to the end of this difficult process, and I expect to announce a decision within the next 30 days about whether we have been able to find a 'win-win' principal reduction strategy or whether, on the other hand, we will take principal reduction off the table entirely.”

Watt’s remarks come one day after the Wall Street Journal reported that the FHFA has already approved a plan under which fewer than 50,000 “underwater” homeowners, who owe more than their homes are worth and are already behind in their mortgage payments, will likely be eligible to have their mortgage balances cut. According to the article, the GSEs would allow principal forgiveness only when it would result in fewer losses than other strategies. However, Watt’s speech suggests that the FHFA is still deliberating its final strategy. As he stated last week, "It would not be an overstatement to say that this has been the most challenging evaluation the agency has undertaken during my time as director."

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BoE TO PUBLISH REVIEW OF REGULATORY IMPACT ON MARKET LIQUIDITY

According to a recent Bloomberg article, the Bank of England (“BoE”) announced that it will publish an assessment of how regulation affects the efficient functioning of U.K. bond markets this year.

The BoE’s Financial Policy Committee noted “lower market depth, smaller trade sizes on average and greater price impact of asset sales” in their statement. Anomalies in the market are also becoming more persistent as market makers are less willing to provide financing to leveraged investors and the repurchase market is shrinking in size as the price of receiving this service increases.

“This increase in the cost incurred by leveraged investors to obtain financing using gilt collateral could reduce activity in financial markets going forward, with potentially adverse implications for market liquidity,” BoE officials stated.

According to the article, the BoE considers regulation to be an important part of reform for the banking industry and that it improves the resilience of markets in times of stress. “..some market developments motivate careful review and consideration of whether there are any possible refinements to internationally agreed post-crisis regulations that could further promote market effectiveness without compromising the resilience of the core of the financial system,” the BoE said.

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SFIG COMMITTEES AND TASK FORCES

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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