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Michael Bright, CEO of the Structured Finance Association, Comments about a New SEC Rule Prohibiting Conflicts of Interest in Certain Securitizations

Published on November 28, 2023

The Structured Finance Association (SFA) has issued a statement on the SEC’s finalized rule to prohibit conflicts of interest in certain securitizations.

Michael Bright, CEO of SFA, said, “The SEC’s final rule incorporated many important changes to the initial rule that was re-proposed earlier this year. We continue to analyze it. In particular, we are working to understand what “substantially the economic equivalent” means and how to comply with that requirement, among a few additional such technical questions. But it appears that the modifications will likely allow many market participants to continue to hedge themselves against macro risks without running afoul of conflict-of-interest limitations. Hedging is an essential tool in protecting securitization markets that are a vital source of financing for trillions of dollars in consumer and business credit. We appreciate as well that the SEC altered its initial proposal so that affiliates and subsidiaries of securitization desks would not automatically be subject to SEC restrictions.

The Structured Finance Association thanks the SEC staff and Members of Congress who have shown a deep understanding of capital markets and the important role of securitization in the economy.”