Action Line Update

SEC Issues Fee Rate Advisory #8 for Fiscal Year 2007: The SEC has determined that a mid-year adjustment to the Section 31 fee rate for FY 2007 is not required. The rate of $15.30 per million dollars that will take effect on March 17, 2007 will remain at that level through the end of the fiscal year. The new fee fate under Section 31 of the '34 Act will be announced no later than April 30, 2007, and will become effective on the later date of October 1, 2007, or 30 days after the date on which a regular appropriation to the Commission for FY 2008 is enacted. The press release is available here.

SIFMA Response to SVO Research Quarterly Article: SIFMA recently filed a letter with the National Association of Insurance Commissioners, or the NAIC, regarding an article published by the NAIC. Among other things, SIFMA questions the conclusions of the article, and the methodologies, data, and choice of data used to generate the conclusions. For further information regarding letter or for the related attachments, please contact Mary Kuan at 646.637.9220.

NewBank Steering Committee Meeting: A meeting of the NewBank Steering Committee has been scheduled for Monday, March 26 at 4:00 p.m. in SIFMA's New York Offices at 360 Madison Avenue. If you have any questions or comments regarding the meeting, please contact Rob Toomey at 646.637.9224 with any questions.

Treasury Auction System Task Force Meeting: A meeting of the Treasury Auction System Task Force together with the primary dealer members of the Government Operations Committee has been scheduled for Thursday, March, 15, 2007 from 4:00 - 5:30 p.m. If you have any questions, please call Brian MacWilliams at 646.637.9227 with any questions.

New GSE Reform Bill Introduced: Congressman Barney Frank, along with Reps. Richard Baker (R-LA), Mel Watt (D-NC) and Gary Miller (R-CA) have introduced bipartisan legislation (H.R. 1427, the "Federal Housing Finance Reform Act of 2007") to overhaul the regulatory oversight of the government sponsored enterprises (GSEs) which include Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The House Financial Services Committee will hold two hearings on this legislation. The legislation will create a new independent regulator with broad powers analogous to current banking regulators. In addition, the bill creates an off-budget and non-taxpayer financed affordable housing fund. A summary is available here. The bill is available here. A press release is available here. Please contact Chris Killian at 646.637.9226 for more information.

Fannie Mae Announces New Single Family MBS Master Trust Agreement : Fannie Mae has announced that it will put in place a new trust agreement for single family MBS effective June 1, 2007. Fannie stated that the executed agreement will be available on its website by March 31, 2007. A trust agreement is a legal document that contains the terms and conditions of an MBS trust and outlines the responsibilities of the various parties to the trust. Fannie Mae's announcement also contains a number of clarifications to its servicing guide. The full announcement is available here.

MSRB Notice (2007-10) - Request For Comment on Proposed Rule Changes to Improve Transaction Reporting of New Issue Municipal Securities: The Municipal Securities Rulemaking Board (MSRB) is requesting comment on proposed rule changes to improve the trade reporting and price transparency of transactions effected in new issues of municipal securities. The rule changes include draft amendments to Rule G-34, on CUSIP Numbers and New Issue Requirements that would require underwriters to follow certain procedures for disseminating new issue information necessary for trade reporting. For more information, please contact Leslie Norwood at 646.637.9230.

SIFMA, EPDA and EHYA Respond to CESR Call for Evidence on Non-Equity Markets Transparency: SIFMA and its affiliates, the European Primary Dealers Association and the European High Yield Association submitted a joint comment letter to CESR's call for evidence on Non-Equity Markets Transparency. CESR had issued this consultation following instructions from the EU Commission in the context of the Commission's obligation, under MiFID, to report back to the Council and Parliament on whether or not to extend MiFID price transparency provisions to non-equity markets. In their response, the joint associations stressed that: (i) EU primary bond market issuance and secondary market e-trading are continuing to experience significant growth, bringing additional transparency into an overwhelmingly institutional market; (ii) it is essential to fully understand bond market structure in order to assess the impact of additional price transparency; (iii) it is important to address certain factors, arising out of this market structure, that may contribute to the perception by regulators and certain smaller institutional and retail investors of a market failure in the provision of price transparency; (iv) price formation is becoming increasingly efficient in all segments of the EU bond market, in particular due to the continued growth of CDS; (v) the fact that bond price information is not widely available to, and not user-friendly for, non active bond market participants is not a market failure per se, but a result of how markets operate and the nature of the role that particular participants play; therefore, there is no convincing evidence of a market failure in the provision of price transparency in the EU bond market. Quite the opposite, there is a healthy continuation of market-driven price transparency; (vi) the additional retail investor protections in the areas of best execution, suitability and investment advice are more relevant to the protection of retail investors against another Parmalat or Argentina default type scenario than regulated or self-regulated price transparency; and (vii) meaningful, user-friendly, free and educational price information could be of some assistance to smaller institutional and retail bond investors.

FSA Publishes Updated Paper on Market Cleanliness: The Financial Services Authority (FSA) has published an occasional paper, entitled "Updated Measurement of Market Cleanliness," which is an update to its March 2006 paper on the subject. The paper measures the cleanliness of UK financial markets by exploring the extent to which share prices move ahead of the regulatory announcements which issuers are required to make to the market. This paper includes the trading data from the 2004/2005 period.

EU and US Discuss Cooperation on Audit Regulation: Charlie McCreevy, EU Commissioner for the Internal Market and Services, and Mark Olsen, Chairman of the Public Company Accounting Oversight Board (PCAOB), met in Washington to discuss cooperation between the EU and US on audit regulation in order to move towards full reliance on each others' oversight systems by 2009. In the EU, provisions of Directive 2006/43/EC on statutory audits of annual and consolidated accounts allow for further cooperation with third countries. These include provisions which: (i) empower the Commission to recognise third country oversight of auditors as equivalent throughout the EU; (ii) allow the Commission to accept the equivalence of US independence requirements and auditing standards; and (iii) permit the establishment of a framework allowing EU public oversight bodies to conclude bilateral agreements with third country oversight bodies. Both the Commission and the PCAOB will review progress in October 2007.

EU Council Publishes Conclusions of ECOFIN Meeting on Better Regulation and Reducing Administrative Burdens: The Council of European Finance Ministers (ECOFIN) has published the conclusions of its meeting in Brussels on February 27, 2007 on better regulation and reducing administrative burdens in the EU where they welcomed the January 2007 EU Commission action programme for reducing administrative burdens in the EU.

CEIOPS Invites Feedback on Performance Assessment Questionnaire: Prompted by the Inter-institutional Monitoring Group's (IIMG) assessment of the progress made in implementing the Lamfalussy process, as used in the Solvency II project, the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has published a questionnaire which invites all interested parties to provide feedback on its policy, processes and activities since its foundation in 2003. Comments are invited by March 30, 2007.

Joint Associations' Follow-up Response to FSA CP06/19 and CP06/20: SIFMA and the associations listed in the joint response published a follow-up response to their November 28th response to FSA's MiFID implementation consultation papers CP06/19 (Conduct of Business) and CP06/20 (Financial Promotion).

Joint Associations Respond to CESR Level 3 Consultation on Transaction Reporting: SIFMA and the associations listed in the joint response responded to CESR's Consultation Paper on the proposed Level 3 Guidelines on MiFID transaction reporting, focusing on three general issues: (i) the need for clarification on transaction reporting issues as soon as possible; (ii) the transitional issues for firms; and (iii) an analysis of CESR's proposed booking test and the "characteristic performance" test.

EU Commission Publishes Single Market in Financial Services Progress Report 2006: The EU Commission has published a progress report highlighting its achievements made in 2006 which further the single market in financial services. These achievements include: (i) the June 2006 adoption of Capital Requirements Directive (CRD); (ii) the November 2006 publication of a White Paper on Investment Funds; and (iii) the November 2006 adoption of the "European Code of Conduct for Clearing and Settlement."

EU Council Publishes Conclusions of ECOFIN Meeting on T2S : The Council of Economics and Finance Ministers (ECOFIN) has published the conclusions of its meeting held in Brussels on February 23, 2007 to discuss the establishment of the TARGET2-Securities project (T2S). The Ministers stress the importance of: (i) T2S being accessible to non-euro area Central Securities Depositaries (CSDs) and currencies; (ii) compliance with EU competition policy; (iii) involvement of all affected market participants from across the EU in the governance structure; and (iv) regular reporting to the Financial Services Committee (FSC), the Economic and Financial Committee (EFC), and the Council on the progress of the T2S project.

IOSCO Consults on Market Intermediary Management of Conflicts in Securities Offerings: The Technical Committee of the International Organization of Securities Commissions (IOSCO) has published a consultation report concerning conflicts of interest that may arise when market intermediaries are involved in securities offerings, with a view to generating principles for use by intermediaries in their management practices. The report discusses: (i) the meaning of the term "conflict of interest" in the context of the report; (ii) proposed approaches for addressing conflicts and means of implementation reflecting sound practices; and (iii) examples of circumstances in which market intermediaries may face potential conflicts of interest and measures for handling the particular conflicts by reference to case studies. Comments are invited by May 25, 2007.

EU Commission Updates ISD List of Regulated Markets : The EU Commission has published an updated list of regulated markets notified to it by member states pursuant to the obligation under Article 16 of the Investment Services Directive (ISD). The list indicates: (i) the title of the individual markets recognised by national competent authorities as complying with the definition of a regulated market under Article 1(13) of the ISD; (ii) the entity responsible for managing each market; and (iii) the competent authority responsible for issuing or approving the rules of the relevant market.

EU Commission Welcomes SEC Re-proposal to Allow Foreign Private Issuer Deregistration: The EU Commission has published a letter to the Securities and Exchange Commission (SEC) welcoming its December 2006 announcement concerning re-proposed new rules which aim to make it easier for foreign private issuers to terminate permanently their reporting obligations under the Securities Exchange Act of 1934. The letter also contains technical comments on the re-proposal stating, amongst other things, that the Commission would like to see an increase in the trading volume threshold, which stands at five percent, in order to allow a higher number of EU issuers to use the new rules.