Some CLO Managers Begin to Position for a Risk-Retention Rollback

According to a Bloomberg article, some CLO managers are indicating that it would not make sense to comply with European risk-retention rules if similar restrictions are rolled back by Congress as part of the Trump Administration's plan to "do a big number on Dodd-Frank".

Some firms are concerned about having to potentially hold an illiquid retention piece if the U.S. regulation is repealed, prompting some U.S. managers to back away from dual-compliant deals. While the fate of the Financial CHOICE Act remains unclear, its advancement by House Republicans has given a glimmer of hope to some managers that the rules will eventually be rolled back.

SFIG, by nature of its duty to represent the views of all market participants, strongly believes in the need for financial regulatory reform. However, SFIG would also highlight the importance of maintaining policies proven to promote the healthy functioning of the market. We continue to engage with members across all asset classes to drive constructive reform.

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