Goldman Sachs’ Abacus CDO was not the only part of the structured finance market that was occupying the SEC last month. On April 7 SEC Chairman Mary Schapiro proposed a new set of rules for the securitization market designed to "better protect the investor". But some participants fear that it will close down important parts of the ABS market just as it is reopening.
As with all new regulation aimed at this market since 2007 the focus is on increased transparency, but the regulator is seeking to go much further than simply increasing information flow. "The SEC has done a terrific job on Reg AB and the new proposed amendments reflect a lot of thought and hard work and are a clear attempt to balance all of the competing interests," explains Jason Kravitt, partner at Mayer Brown in New York. "But people have to take a step back. This is not purely about disclosure. It is an attempt to regulate substance through disclosure. It is substantive regulation."
Public disclosure
The most contentious aspects of the proposals are that they seek to apply public disclosure rules (Reg AB) to the private 144a (or Reg D) market and also that they include the securitization market’s favourite bugbear – retention rules.
