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February 22, 2017

SIFMA Securitization Group (SSG) Update is a weekly update on securitization news, regulation, and events.

In the Spotlight

New York Fed Blog Post Examines Decline of Homeownership
In a recent blog post, the Federal Reserve Bank of New York analyzes the decline in the homeownership rate. As stated in the blog post, “The homeownership rate—the percentage of households that own rather than rent the homes that they live in—has fallen sharply since mid-2005. In fact, in the second quarter of 2016 the homeownership rate fell to 62.9 percent, its lowest level since 1965. In this blog post, we look at underlying demographic trends to gain a deeper understanding of the large increase in the homeownership rate from 1995 to 2005 and the subsequent large decline. Although there is reason to believe that the homeownership rate may begin to rise again in the not-too-distant future, it is unlikely to fully recover to its previous peak levels.”
Press Release

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Market Updates

TRACE Reporting and Dissemination of CMO Trades User Acceptance Test
On Monday, March 20, 2017, FINRA will release new software with changes and enhancements to TRACE trade reporting and dissemination for Collateralized Mortgage Obligation (CMO) securities. Firms that report CMO transactions and TRACE market data consumers of the SPDS and SPDS-144A data feeds must accommodate these changes and enhancements by this date.

In addition, the TRACE Corporate and Agency Security Master list and Daily List files will be adding a Convertible Flag field, and will be eliminating the Fitch Rating heading and its associated data from the Corporate and Agency Most Active Media Print files.

FINRA will conduct a production TRACE User Acceptance Test (UAT) from 9 a.m. to 12 p.m. Eastern Time (ET) on Saturday, February 25, 2017.

Please direct questions concerning system testing by email to FINRA Product Management or by phone to (866) 899-2107.

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Of Interest

SIFMA Releases US Foreign Activity Report, Fourth Quarter 2016
The US Foreign Activity report is a semiannual report and semiannual addendum that tracks purchases and sales of U.S. securities by foreign investors and U.S. purchases and sales of foreign securities. Both gross activity and net purchases are broken out by country and area.
Press Release

Federal Reserve to offer seven-day term deposits on February 23
The Federal Reserve plans to continue its previously announced periodic testing of the Term Deposit Facility (TDF) with one operation in February. These operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures. The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. The Federal Reserve plans to conduct a similar routine TDF test operation each quarter in 2017. The schedule and terms for future test operations will be announced at later dates.
Press Release

Treasury International Capital Data For December
The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for December 2016.  The next release, which will report on data for January 2017, is scheduled for March 15, 2017.

The sum total in December of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $42.8 billion.  Of this, net foreign private outflows were $57.1 billion, and net foreign official inflows were $14.3 billion.

Foreign residents decreased their holdings of long-term U.S. securities in December; net sales were $13.9 billion.  Net sales by private foreign investors were $32.0 billion, while net purchases by foreign official institutions were $18.1 billion.

U.S. residents decreased their holdings of long-term foreign securities, with net sales of $1.1 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign sales of long-term securities were $12.9 billion.  After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign sales of long-term securities are estimated to have been $29.4 billion in December.

Foreign residents increased their holdings of U.S. Treasury bills by $11.1 billion.  Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $33.5 billion.

Banks' own net dollar-denominated liabilities to foreign residents decreased by $46.8 billion.
Press Release

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SIFMA News

SIFMA Statement on Confirmation of Treasury Secretary Mnuchin
SIFMA president and CEO Kenneth E. Bentsen, Jr.  congratulated Mr. Steven Mnuchin on his confirmation as U.S. Treasury Secretary.  “SIFMA and our members look forward to working with the Secretary to ensure our nation’s capital markets play their part in fueling economic growth and job creation,” he said.
Read Press Statement

SIFMA, ABA and IIB Respond to Joint Agencies’ Cybersecurity Request for Comment
On February 17, SIFMA, together with the American Bankers Association (ABA) and Institute of International Bankers (IIB), submitted comments to the Board of Governors of the Federal Reserve System (“Fed”), the Office of the Comptroller of the Currency (“OCC”), and the Federal Deposit Insurance Corporation (“FDIC”) regarding their joint advance-notice of proposed rulemaking (“ANPR”) on Enhanced Cyber Risk Management Standards. The Associations commend the Agencies for their proactive review of the cybersecurity landscape and thoroughness in seeking insight from industry participants on the front lines. The comment letter highlights that prescriptive new regulatory requirements are unnecessary at best and could in fact hamper cybersecurity practices, leaving guidance as the most effective path forward for enhancing cybersecurity.

“Cybersecurity is a top priority for financial institutions, which are dedicating significant resources every day to help protect clients and the integrity of the financial system. Financial institutions also dedicate a significant amount of time and resources toward compliance with an already robust, expanding, and often overlapping, set of cybersecurity regulations,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO. “Firms report that approximately 40 percent of corporate cybersecurity activities are compliance-oriented rather than security-oriented. As such, it is imperative that regulators avoid imposing new rules with unnecessary or duplicative requirements that could deter valuable and finite resources. We are encouraged by the Trump Administration’s Executive Order calling for a review of financial regulation and urge regulators to thoroughly review the risks and unintended consequences that could arise from new cyber regulation.”

If any new rule is promulgated, it should adopt a risk-based approach consistent with the global approach used in voluntary frameworks such as the NIST Cybersecurity Framework, setting control objectives rather than prescriptive requirements. 
Read Press Statement
See comment letter

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Upcoming SIFMA Events

Social Media & Digital Marketing Seminar 2017
February 23, 2017 - The Schwab Conference Center, San Francisco, CA

2017 Insurance and Risk Linked Securities Conference
February 26-28, 2017 - Eden Roc, Miami Beach, FL

Securities Industry Institute (SII) 2017
March 5-10, 2017 - Wharton University of Pennsylvania

C&L 2017 Annual Seminar
March 19-22, 2017 - Marriott Marquis San Diego Marina

T2 Settlement Conference 2017
March 29, 2017 - New York Marriott Downtown

MiFID II Seminar
April 04, 2017 - SIFMA Conference Center, New York, NY

Private Client Conference 2017
April 5-7, 2017 - The Westin Kierland, Scottsdale, AZ

Canada-US Securities Summit 2017
April 20, 2017 - SIFMA Conference Center, New York, NY

Equity Market Structure Conference 2017
April 26, 2017 - Convene Conference Center, New York, NY

Fixed Income Market Structure Seminar 2017
April 27, 2017 - SIFMA Conference Center, New York, NY

2017 Operations Conference and Exhibition
May 8-11, 2017 - Boca Raton, Florida

SIFMA FinTech Conference
June 5-6, 2017 - SIFMA Conference Center, New York, NY

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Resources

SIFMA Resources
SIFMA Securitization Group Activity and Resources
SIFMA on Housing Finance Reform
SIFMA To-Be-Announced Market Factsheet
SIFMA Legal and Regulatory Action Pipeline
SIFMA Newsletters
SIFMA’s Upcoming Conference and Events

Regulator Resources
SEC’s Dodd-Frank Rulemaking Calendar
FDIC’s Dodd-Frank Page – links to initiatives, rule proposals, events, meetings, etc…
Federal Reserve Dodd-Frank Page – links to initiatives, rule proposals, events, meetings, etc…

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