Posts by: Eric Nyman

CFTC Unanimously Approves Final Rule Amending Swap Execution Facility Requirements

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On November 18, the CFTC unanimously approved a final rule amending certain parts of its regulations relating to the execution of “package transactions” on swap execution facilities (SEFs) and the resolution of error trades on SEFs. The final rule amends part 37 of CFTC regulations to allow the swap components of certain categories of package transactions to be executed on SEF but through flexible means of execution rather than through the required methods of execution for “required transactions.” Release.

FHFA Further Extends COVID-Related Loan Flexibilities

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On November 13, the FHFA announced that it will extend several loan origination flexibilities until December 31 that were set to expire on November 30. The extended flexibilities include alternative appraisals on purchase and rate term refinance loans, alternative methods for documenting income and verifying employment before loan closing and expanding the use of power of attorney to assist with loan closings. Release.

SEC Adopts Amendments to Modernize Shareholder Proposal Rule

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On September 23, the Securities and Exchange Commission (SEC) adopted amendments to modernize the process for a shareholder to have its proposal included in a company’s proxy statement for consideration by all of the company’s shareholders. The amendments aim to ensure that shareholder-proponents demonstrate a sufficient economic stake or investment interest in a company before they are able to submit proposals to be included in a company proxy’s statement, paid for by all shareholders. Release.

Federal Reserve Board Releases Hypothetical Scenarios for Second Round of Bank Stress Tests

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On September 17, the Federal Reserve Board released its hypothetical scenarios for a second round of bank stress tests. Earlier this year, the Board’s first round of stress tests found that large banks were well capitalized under a range of hypothetical events. An additional round of stress tests is being performed due to the continued uncertainty from the COVID event. Release.

Agencies Issue Corrections to Standardized Approach for Counterparty Credit Risk; Final Rule

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On September 17, the OCC along with the Board of Governors of the Federal Reserve System and the FDIC published a final rule that makes technical corrections to certain provisions of the capital rule related to the standardized approach for counterparty credit risk (SA-CCR), which is used for calculating the exposure amount of derivative contracts. Final Rule.

CFTC Finalizes Rules to Improve Swap Data Reporting

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On September 17, the Commodity Futures Trading Commission (CFTC) approved three final rules to revise CFTC regulations for swap data reporting, dissemination and public reporting requirements for market participants. The CFTC also approved a final rule that will permit derivatives clearing organizations organized outside of the U.S. to be registered with the CFTC. The CFTC also approved a supplemental notice of proposed rulemaking regarding amendments to the CFTC’s regulations that govern bankruptcy proceedings for commodity brokers. Release.

Rating Agency Developments (July 17 – July 29)

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On July 29, Moody’s published an updated ratings methodology titled US Local Government General Obligation Debt. Methodology.

On July 28, KBRA published a surveillance report titled Financial Institutions: Business Development Corporation of America Surveillance. Report.

On July 27, Fitch published an updated ratings methodology titled EMEA Equity Release Mortgage Bespoke Rating Criteria. Methodology.

On July 27, DBRS Morningstar published an updated ratings methodology titled Global Methodology for Rating Sovereign Governments. Methodology.

On July 24, KBRA published a surveillance press release titled KBRA Affirms Classes for Seven RMBS Transactions. Release.

On July 24, Moody’s published an updated ratings methodology titled Moody’s Methodology for Rating Debt Issuance Under Certified Capital Company, New Markets Tax Credit and Similar Programs. Methodology.

On July 24, Moody’s published an updated ratings methodology titled Moody’s Approach to Rating Trade Receivables-Backed Transactions. Methodology.

On July 24, Moody’s published an updated ratings methodology titled Moody’s Approach to Rating Future Receivables Transactions. Methodology.

On July 23, KBRA published a research report titled Public Finance: Coronavirus (COVID-19): Retail Sales Stabilize but Rising Cases Temper Outlook. Report.

On July 21, DBRS Morningstar published an updated ratings methodology titled North American Commercial Mortgage Servicer Evaluations. Methodology.

On July 21, DBRS Morningstar published an updated ratings methodology titled Rating European Structured Finance Transactions. Methodology.

On July 21, DBRS Morningstar published an updated ratings methodology titled Rating CLOs and CDOs of Large Corporate Credit. Methodology.

On July 21, DBRS Morningstar published an updated ratings methodology titled Cash Flow Assumptions for Corporate Credit Securitizations. Methodology.

On July 17, Moody’s published an updated ratings methodology titled Moody’s Approach to Rating ABS Backed by Equipment Leases and Loans. Methodology.

On July 17, Moody’s published an updated ratings methodology titled Moody’s Global Approach to Rating Auto Loan- and Lease-Backed ABS. Methodology.

On July 17, Moody’s published an updated ratings methodology titled Moody’s Approach to Rating Consumer Loan-Backed ABS. Methodology.

Rating Agency Developments (May 22 – June 3)

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On June 3, KBRA published a Structured Finance research report titled CMBS: Coronavirus (COVID-19): CMBS Loan Performance Trend Update. Report. 

On June 3, KBRA published a report titled Public Finance: Coronavirus (COVID-19): States Brace for Unprecedented Medicaid Expansion. Report.

On June 2, KBRA published a report titled ABS: Coronavirus (COVID-19): Modifying Auto and Consumer Loan Delinquency Expectations. Report. 

On May 29, KRBA published a Structured Finance – CMBS surveillance report titled CMBS: BANK 2019-BNK18. Report.

On May 27, Fitch published an updated rating methodology titled APAC Residential Mortgage Rating Criteria. Methodology.

On May 27, DBRS Morningstar published its updated methodology titled U.S. ABS Surveillance. Methodology.

On May 22, Moody’s published an updated rating methodology titled Moody’s Approach to Rating Large Loan and Single Asset/Single Borrower CMBS. Methodology.

On May 22, Moody’s published an updated rating methodology titled Moody’s Approach to Rating Derivative Product Companies. Methodology.

FHFA Publishes Final Rule on the FHLBanks’ Housing Goals

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On June 3, the Federal Housing Finance Agency (FHFA) sent for publication a final rule on the Federal Home Loan Banks’ Housing Goals, which eliminates the retrospective evaluation using HMDA data and set a single prospective mortgage purchase housing goal as a share of each FHLBank’s total Acquired Member Asset purchases. The rule also sets a new small member participation housing goal for participation by small institutions, eliminates the volume threshold and simplifies the eligibility criteria to enable federally backed loans sold by small institutions eligible to count for goals purposes. Release.

Federal Reserve Board Announces Expansion in the Number and Type of Entities Eligible to Directly Use Its Municipal Liquidity Facility

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On June 3, the Federal Reserve Board announced an expansion in the number and type of entities eligible to directly use its Municipal Liquidity Facility (MLF). Under the new terms, all U.S. states will be able to have at least two cities or counties eligible to directly issue notes to the MLF, regardless of population. Governors of each state will also be able to designate two issuers in their jurisdictions whose revenues are generally derived from operating government activities to be eligible to directly use the facility. Release.