WASHINGTON, July 14, 2023 – The Structured Finance Association (SFA) sent a follow-up letter to the Securities and Exchange Commission (SEC) with recommended amendments to the re-proposed rule on the Prohibition Against Conflicts of Interests in Certain Securitizations that would protect investors while maintaining the strength of the financial market. SFA members believe the current text of the sweeping re-proposed rule is critically flawed, conflicts with the goals of numerous prudential regulators, relies too heavily on the Volcker Rule as a precedent, and would impose significant impediments to the continued healthy functioning of the asset-backed security (ABS) and broader financial markets.

SFA provided preliminary comments on the re-proposed rule to the SEC in a previous letter dated March 27, 2023. Since then, SFA has engaged with its market-wide membership base to assess the full scope of the impact of the re-proposal and to build industry consensus on how to draw the line between prohibiting material conflicts of interest and assuring the continued functioning of the ABS markets. SFA’s proposed changes to the rule are a product of the Association’s consensus-building approach, which provides a full picture of market considerations.

“The Structured Finance Association allows the securitization market as a whole to speak with one voice to policymakers on a variety of important matters. The recommended changes to the re-proposed rule included in today’s letter are the consensus view of our 370+ diverse members,” Michael Bright, CEO of the Structured Finance Association. “We expect the SEC to seriously consider our recommendations because the Commission is capable of addressing its concerns while also providing a workable compliance regime for investors and the consumers and businesses that rely on our markets for financing.”

Due to the complexity and interdependency of the re-proposed rule, SFA’s proposed changes must be viewed as a whole – the omission of or substantial changes to the amendments could have ripple effects that make the rule continue to be unworkable.