Rating Agency Developments


On September 7, 2016, Moody’s updated and replaced its approach to assessing credit risk for U.S. charter schools. Report.

On September 7, 2016, S&P published its global framework criteria for rating securitizations of nonperforming loans. Report.

On September 2, 2016, DBRS issued a report titled: Rating Companies in the Communications Industry. Report.

On September 2, 2016, DBRS issued a report titled: Rating Companies in the Merchandising Industry. Report.

On September 2, 2016, DBRS issued a report titled: Rating Companies in the Consumer Products Industry. Report.

On September 2, 2016, DBRS issued a report titled: Rating Companies in the Oil and Gas Industry. Report.

On September 2, 2016, DBRS issued a report titled: Rating Companies in the Oilfield Services Industry. Report.

On September 2, 2016, DBRS issued a report titled: Rating Companies in the Mining Industry. Report.

On September 2, 2016, DBRS issued a report titled: Rating Container Terminal Operators. Report.

On September 1, 2016, Fitch updated its criteria for servicing continuity risk and incorporated it into the broader counterparty criteria for structured finance and covered bonds. Press release.

CFTC Issues No-Action Letter to Swap Dealers to Extend Collateral Rule Deadline due to Limitations with Custodial Accounts


On September 1, 2016, the U.S. Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer and Intermediary Oversight announced that it “issued a time-limited, no-action letter stating that it will not recommend an enforcement action against a swap dealer subject to the September 1, 2016 compliance date for the CFTC’s uncleared swap margin rules, subject to certain conditions, for failing to fully comply with the custodial arrangement requirements of CFTC regulation 23.157 prior to October 3, 2016.” Press release.

European Commission Adopts MiFIR Delegated Regulation on RTS on Access to Benchmarks

On June 2, 2016, the European Commission adopted a Delegated Regulation supplementing the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR) with regard to regulatory technical standards (RTS) on access in respect of benchmarks (C(2016) 3203 final).

MiFIR provides for the non-discriminatory access for central counterparties (CCPs) and trading venues to licences of, and information relating to, benchmarks that are used to determine the value of some financial instruments for trading and clearing purposes.

The Delegated Regulation lays down the list of information to be provided to a trading venue or CCP, the conditions under which access must be granted as well as specifications on non-discriminatory treatment. It also sets out the standards for determining how a benchmark can be considered to be new, and hence benefit from transitory arrangements.

Following adoption of the Delegated Regulation by the Commission, it will be considered by the Council of the EU and the European Parliament. If neither of them objects, the Delegated Regulation states that it will enter into force 20 days after its publication in the Official Journal of the EU (OJ) and will apply from the date referred to in the fourth paragraph of Article 55 of MiFIR.

Rating Agency Developments

On January 6, DBRS published its methodology for rating European commercial mortgage loans and European CMBS transactions. Report.

On January 4, DBRS published its preferred share and hybrid security criteria for corporate issuers. Report.

On January 4, DBRS published its methodology for rating holding companies and their subsidiaries. Report.

On January 4, DBRS published its methodology for rating CLOs backed by loans to European Small and Medium-Sized Enterprises (SMEs). Report.

On January 4, DBRS published its methodology for rating European RMBS transactions. Report.

On December 31, DBRS published its methodology for rating European structured finance servicers. Report.

On December 31, Moody’s published its rating methodology for investment holding companies and conglomerates. Report.

CFTC Extends Time-Limited No-Action Relief for Swap Execution Facilities from Certain “Block Trade” Requirements

On November 2nd, the U.S. Commodity Futures Trading Commission (“CFTC”) extended no-action relief to Swap Execution Facilities (“SEFs”)  from the “occurs away” requirement in the definition of “block trade” under CFTC regulation Section 43.2. The definition of “block trade” includes publicly reportable swap transactions that occur, “away from the registered [SEF’s] or [Designated Contract Market’s] trading system or platform and is executed pursuant to the registered [SEF’s] or [Designated Contract Market’s] rules and procedures”. CFTC Letter 15-60 extends no-action relief from the “occurs away” requirement through November 15, 2016Press ReleaseCFTC Letter 15-60.

CFTC’s Division of Market Oversight Provides Additional Time to Comply with Electronic Reporting Requirements in the OCR Final Rule

On September 28, the U.S. Commodity Futures Trading Commission’s (the “Commission”) Division of Market Oversight issued a no-action letter that provides reporting parties additional time to comply with certain reporting requirements of the ownership and control final rule.  The rule requires reporting parties to electronically submit trader identification and market participant data on new and updated forms.  These forms allow for better identification of participants in futures and swaps markets.  Providing reporting parties with additional time is aimed at improving the reliability and consistency of data provided to the Commission.  The no-action letter extends relief to dates ranging from April 27, 2016 to February 13, 2017.  Press Release.

BCBS Consults on Proposed Revised Version of General Guide to Account Opening

On July 16, 2015, the Basel Committee on Banking Supervision (BCBS) issued a consultation paper on a proposed revised version of its general guide to account opening.

The guide was first published in February 2003. The proposed revised version takes into account the significant enhancements that have been made to the Financial Action Task Force (FATF) recommendations and related guidance since it was first published.

The guide focuses on account opening. It is not intended to address every possible situation, but instead focuses on some of the mechanisms that banks can use in developing an effective customer identification and verification program that enables them to meet their obligations under anti-money laundering (AML) and counter-terrorist financing (CTF) requirements. The guide also sets out the information that should be gathered at the time of account opening and will help the bank to complete the customer risk profile. The aim is to support banks in implementing the FATF standards and guidance, which require the adoption of specific policies and procedures, in particular on account opening.

When finalized, the revised version of the guide will be added as an annex to the BCBS’ guidelines for a sound management of risks related to money laundering and financing of terrorism, which were published in January 2014.

SEC Proposes New Rule on Communications Involving Security-Based Swaps

On September 8, the SEC proposed a new rule that certain communications involving security-based swaps that may be purchased only by eligible contract participants will not be deemed for purposes of Section 5 of the Securities Act to constitute offers of such security-based swaps or any guarantees of such security-based swaps.  Comments should be received by the SEC on or before November 10, 2014.   Proposed Rule.  

Trustee’s Repurchase Suit Against Quicken Loans Dismissed as Time-Barred

On August 4, Judge Paul A. Crotty of the Southern District of New York granted Quicken Loans’ motion to dismiss a lawsuit brought by Deutsche Bank National Trust Co. (as Trustee of the GSR 2007-OA1 trust), alleging that Quicken breached its obligation to repurchase defective mortgage loans.  Following the First Department’s decision in ACE Securities, Judge Crotty held that the six year statute of limitations for breach of contract began to accrue when Quicken allegedly breached the representations and warranties at issue�at the time the loans were sold�not when the Trustee demanded repurchase.  He rejected the plaintiff’s argument that the lawsuit was timely because the contract at issue included a so-called “accrual” provision, which specified that the Trustee’s cause of action for repurchase would accrue upon (1) notice of breach (2) failure to cure the breach and (3) Plaintiff’s demand for cure.  The court held that the accrual provision could not alter the six-year limitations period because parties cannot agree in advance to extend the statute of limitations before any claims have accrued.  Opinion and Order.