Action Line Update
May 21, 2007
Highlights
- MBA Publishes 2006 MARI Mortgage Fraud Report
- FICC Announces Go-Live of Specified Pool Trading
- Federal Reserve Board Chairman Speaks on Subprime Market
- Senator Proposes Legislation on Foreclosure Prevention
- FSA Confirms Industry Guidance on Outsourcing
- Ed Balls Writes to Charlie McCreevy Expressing Concern over MiFID Implementation
- FSA Publishes Latest MiFID Transposition Tables
- CESR Reports on Dialogue with Rating Agencies Regarding IOSCO Code of Conduct Fundamentals
- EU Commission Requests Advice from CEBS on Options and Discretions in CRD
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Indicates a new item. Items that are solely informational are generally removed after two weeks. New items normally will be posted to the website weekly.
CROSS MARKET ISSUES
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Fixed Income Operations Conference Planning Committee: The Fixed Income Operations Conference Planning Committee has scheduled a meeting for Wednesday, June 13, 2007 at 4:00 p.m. The purpose of the meeting is to begin discussions regarding the development of the program agenda. If you have any questions or comments please contact Brian MacWilliams at 646.637.9227.
CORPORATE CREDIT MARKETS
FUNDING
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Funding Division Executive Committee Joint Meeting: The Funding Division Executive Committee will have a joint meeting with the Specials Working Group on Tuesday, May 29, 2007 at 4:00 p.m. (EST) at SIFMA's 360 Madison Avenue, New York offices. If you have any questions or comments please contact Robert Toomey at 646.637.9224.
Treasury Market Best Practices Released: For full story see Government and Federal Agency Markets Issues section.
Treasury Market Practices Group Conference: For full story see Government and Federal Agency Markets Issues section.
GOVERNMENT AND FEDERAL AGENCY MARKETS
Treasury Market Best Practices Released: The Treasury Market Practices Group has released its final Best Practices. SIFMA's comment letter on the group's earlier exposure draft is available on its website. If you have any questions, please feel free to contact Robert Toomey at 646.637.9224.
Treasury Market Practices Group Conference: The Treasury Market Practices Group is hosting a conference on Thursday, June 14, 2007 from 8:30 a.m. to 12:30 p.m. at the Federal Reserve Bank of New York in New York City. Speakers at the event will provide guidance and information on applying best practice principles in the Treasury cash, repo and related markets. The conference will feature remarks by Anthony Ryan, Assistant Secretary for Financial Markets at the U.S. Department of the Treasury, and Tom Wipf, Chairman of the TMPG. All market participants - dealers, brokers, investment funds and foreign central banks - are encouraged to attend. Registration deadline is Tuesday, June 12, 2007. If you have any questions or comments please contact Robert Toomey at 646.637.9224.
MBS AND SECURITIZED PRODUCTS
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MBA Publishes 2006 MARI Mortgage Fraud Report: The Mortgage Bankers Association has published MARI's 2006 Mortgage Fraud Report. The report indicates a 30% increase in reports of fraud for 2006 vintage loans when compared to the previous year, with over 28,000 reports collected so far. Florida was found to be the most fraud-ridden state in 2006, displacing Georgia which held the top spot from 2002-2005. The full report is available here.
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FICC Announces Go-Live of Specified Pool Trading: The FICC has announced that participants will be able to send and receive specified pool trade messages beginning June 22, 2007. The FICC reports that "more than half of the MBSD accounts that submit and take interactive messages have been certified for Specified Pool Trade messages" and that "the remaining firms are in the process of testing or finalizing testing arrangements". Firms that cannot complete their development effort in the required time frame will need to utilize the RTTM web to enter Specified Pool Trades, or to affirm those trades submitted against them. Firms that take interactive message output from RTTM must test to ensure that they are able to process revised message output prior to June 22, 2007.
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Federal Reserve Board Chairman Speaks on Subprime Market: Federal Reserve Board Chairman Bernanke spoke this morning at the Federal Reserve Bank of Chicago's Annual Conference on Bank Structure and Competition on the subprime mortgage market, detailing current issues in the market and possible regulatory responses. He noted that "in deciding what actions to take, regulators must walk a fine line; we must do what we can to prevent abuses or bad practices, but at the same time we do not want to curtail responsible subprime lending or close off refinancing options that would be beneficial to borrowers." He indicated that "markets are adjusting to the problems in the subprime market, but the regulatory agencies must consider what additional steps might be needed. The Federal Reserve is currently undertaking a thorough review of all its options under the law" and he believes that "effective disclosures should be the first line of defense against improper lending." Please click here for the speech.
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Senator Proposes Legislation on Foreclosure Prevention: On May 14, 2007 Senator Jack Reed (D-RI), Chairman of the Senate Banking Subcommittee on Securities, Insurance, and Investment, introduced comprehensive legislation to expand access to foreclosure prevention services to homeowners who are experiencing financial hardship. The bill, known as the Homeownership Protection and Enhancement (HOPE) Act of 2007, provides $615 million for the creation and operation of State Homeownership Protection Centers, one-time grants or subsidized loans to qualified families and effective HUD-approved counseling agencies. The bill also creates an affirmative duty for lenders and servicers to engage in reasonable loss mitigation prior to foreclosure and requires notifications by lenders to provide borrowers with information on the full array of counseling services available in their state. Please click here for more information.
MUNICIPAL MARKETS
EUROPEAN MARKETS
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FSA Confirms Industry Guidance on Outsourcing: The Financial Services Authority (FSA) has confirmed that its supervision of outsourcing by firms will, in the future, take account of industry guidance issued by MiFID Connect, a joint project of eleven industry associations including SIFMA. The outsourcing guidance note, which was drafted by Clifford Chance, covers common platform FSA firms subject to one or both of the Markets in Financial Instruments Directive (MiFID) and the Capital Requirements Directive (CRD). The guidance is intended to assist common platform firms in ensuring that their existing outsourcing arrangements will meet the FSA's requirements from November 1, 2007, when MiFID comes into effect.
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Ed Balls Writes to Charlie McCreevy Expressing Concern over MiFID Implementation: Ed Balls, the Economic Secretary to the Treasury, has written a letter to Charlie McCreevy, the EU Commissioner for the Internal Market and Services, expressing his concerns over the potential failure of some member states to implement MiFID by the November 1, 2007 deadline.
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FSA Publishes Latest MiFID Transposition Tables: The FSA has published on its website the latest version of its transposition tables, which indicate, as of January 31, 2007, the extent to which the relevant provisions of levels 1 and 2 of MiFID have been transposed via the FSA Handbook, as well as the relevant Handbook provisions which achieve this.
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CESR Reports on Dialogue with Rating Agencies Regarding IOSCO Code of Conduct Fundamentals: Following a request from the EU Commission for the Committee of European Securities Regulators (CESR) to provide a 2007 report reviewing the implementation of the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies (CRAs), CESR has published a progress report containing letters between itself and: (i) Dominion Bond Rating Service Limited; (ii) Fitch Ratings; (iii) Moody's; and (iv) Standard & Poor's, regarding their compliance with the IOSCO Code of Conduct and indicating any deviations from it. CESR has also expressed its intention to look into the forthcoming Securities and Exchange Commission (SEC) implementing rules for new US legislation on the rating business, with a view to assessing its potential impact on business in the EU.
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EU Commission Requests Advice from CEBS on Options and Discretions in CRD: The EU Commission has issued a Call for Technical Advice requesting advice from the Committee of European Banking Supervisors (CEBS) in relation to reducing the number of options and discretions in the Capital Requirements Directive (CRD). CEBS is invited to indicate for each option and discretion identified by its supervisory disclosure framework for credit institutions and investment firms: (i) the manner of exercise of options and discretions available in each member state pursuant to Article 144(b) of the recast Banking Consolidation Directive; (ii) whether further harmonisation is appropriate, with a view to achieving convergence of supervisory practice; and (iii) reasons why consensus might not be found on the deletion of an option or discretion or on the use of mutual recognition of national discretions.
CESR Consults on Transparency in Bond and Other Non-Equity Markets: Following its February 2007 call for evidence seeking comments on questions connected to the November 2006 EU Commission request for advice on transparency in non-equities markets, the Committee of European Securities Regulators (CESR) has published for consultation its conclusions following the responses received to the call for evidence, as well as a number of related new questions. Amongst other things, CESR is requesting comments on: (i) the extent to which retail investor protection considerations could justify pre- or post-trade transparency; (ii) the extent to which the new best execution requirements, introduced by the Markets in Financial Instruments Directive (MiFID), will result in a change in the level of transparency of information provided on a voluntary basis by the industry; and (iii) how retail investor education may be improved and delivered. CESR has also announced an open hearing on the matter to be held on May 30, 2007 at its premises in Paris. Comments are invited by June 8, 2007.
ECB Consults on T2S: Following the March 2007 announcement by its Governing Council to proceed with the next stage of implementing the TARGET2-Securities (T2S) project, the European Central Bank (ECB) has published a consultation paper containing proposed general and high-level principles defining the nature and scope of the T2S settlement service. Market participants are invited to comment on the proposals with regard to their appropriateness, completeness and relevance. This paper initiates the market consultation phase on the T2S User Requirements, which will be prepared by the Eurosystem by the end of 2007. The paper also invites comments on proposed principles for the development of a common platform for Eurosystem collateral management, which will be called Collateral Central Bank Management (CCBM2). Comments are invited by June 27, 2007.
UK Government Discusses Plans for International Centre for Financial Regulation: At a City High-Level Group meeting held on May 9, 2007 in London, Ed Balls, the Economic Secretary to the Treasury, announced the next steps in the Government agenda to increase the global competitiveness of the financial services industry in the UK, which included detailed plans for establishing an International Centre for Financial Regulation (ICFR). The ICFR which is envisaged will carry out research and offer training on international regulation with a view to influencing global regulatory developments.
FSA Publishes Report on Treating Customers Fairly Initiative: The Financial Services Authority (FSA) has published a report setting out, amongst other things, an assessment of firms' progress in implementing, by the March 2007 deadline, the consumer outcomes identified by the FSA as part of its Treating Customers Fairly (TCF) initiative in a substantial part of their business. The FSA believes that a failure by firms to meet this deadline points to a failure by, or lack of commitment from, their senior management, which will cause it to increase the focus and intensity of its supervisory approach for the firms concerned. The report also sets the end of December 2008 as a new deadline for firms to be able to demonstrate that they are consistently treating their customers fairly. The FSA points out that firms can do this by showing that they are delivering the TCF consumer outcomes set out on page 2 of the report.
EU Commission Consults on Fostering Appropriate Regime for Shareholders' Rights: The EU Commission has published a third consultation paper, entitled "Fostering an Appropriate Regime for Shareholders' Rights", in order to assess the need for, and appropriateness of, further potential measures in the field of shareholders' rights, in order to complement its proposed Directive on the matter. The consultation has been prepared following the Commission's announcement, in the explanatory memorandum to the proposed Directive, of its intention to adopt a separate supplementary non-binding instrument on shareholders' rights. The questions contained in this paper address issues that will be dealt with by a Recommendation, which will be introduced independently from the proposed Directive. Comments are invited by July 27, 2007.
Spanish Congress Publishes Draft Law on Mortgage Market and Regulations Related to Mortgage and Financial Systems: The Spanish Congress of Deputies has published a draft Law amending Law 2/1981 of March 25, 1981 on the mortgage market, and other regulations related to mortgage and financial systems. The draft contains all the amendments proposed by the Parliamentary Groups, and is now subject to approval in a plenary meeting of the Congress of Deputies.