On February 28, Fitch addressed questions that have arisen related to the orderly liquidation authority under the Dodd-Frank Act and the securitization safe harbor. Fitch stated that clarifications from the FDIC provide comfort that the rights of investors can be determined at the outset of a securitization and that the ratings assigned to the transaction can be de-linked from those of the sponsoring entity. Fitch Release. Fitch Report.
Month: March 2011
SEC Proposed Clearing Agency Standards for Operations and Governance
On March 3, the SEC proposed rules, as required under the Dodd-Frank Act, regarding the operation and governance of clearing agencies. Under the proposed rules, clearing agencies would be required to: (i) maintain standards with respect to risk management and operations; (ii) have adequate safeguards and procedures to protect the confidentiality of trading information; (iii) have procedures to identify and address conflicts of interest; (iv) require minimum governance standards for their boards of directors; (v) designate a chief compliance officer; and (vi) disseminate pricing and valuation information if they are a central counterparty for security-based swaps. The SEC also reopened the public comment period for rules proposed in October to mitigate conflicts of interest for security-based swap clearing agencies and execution facilities and national securities exchanges that post or make available for trading security-based swaps. Comments on the proposed rules must be submitted by April 29. SEC Release. SEC Proposed Rule. SEC Proposed October Rules.
SEC Proposed Amendments to Remove Credit Ratings in 1940 Act Rules and Forms
On March 3, the SEC proposed rule amendments to remove references to credit ratings in certain rules and forms under the Investment Company Act of 1940, in accordance with the Dodd-Frank Act. The proposed amendments would revise the permissible investment standards for money market funds. A security would no longer need to receive a certain credit rating, but would qualify for investment if the fund’s board or its delegate determines that the security presents minimal credit risks. The SEC’s proposed rule amendments also would remove credit ratings in three other areas: repurchase agreements, certain business and industrial development company (BIDCO) investments, and shareholder reports. Comments on the proposed rule amendments must be submitted by April 25. SEC Release. SEC Proposed Rules.