Prohibition Against Conflicts of Interest in Certain Securitizations (Joint Trades)
Summary
SIFMA, Government Finance Officers Association (GFOA), National Association of State Treasurers (NAST), Bond Dealers of America (BDA), Education Finance Council (EFC), National Association of Bond Lawyers (NABL), National Association of Municipal Advisors (NAMA), National Association of Health and Educational Facilities Finance Authorities (NAHEFFA), and the National Council of State Housing Authorities (NCSHA) provided comments to the U.S. Securities and Exchange Commission (SEC) on the supplemental proposed rule on Prohibition Against Conflicts of Interest in Certain Securitizations, dated January 25, 2023.
Excerpt
March 27, 2023
Vanessa A. Countryman
Secretary
Securities and Exchange Commission (SEC)
100 F Street, NE Washington, DC 20549-1090
RE: Prohibition Against Conflicts of Interest in Certain Securitizations [Release No. 33-11151; File No. S7-01-23]
Ms. Countryman,
On behalf of issuers of municipal securities and other market participants our organizations collectively represent, we write to you in response to the U.S. Securities and Exchange Commission’s (“SEC’s”) supplemental proposed rule on Prohibition Against Conflicts of Interest in Certain Securitizations (Release No. 33-11151), dated January 25, 2023. Members of our organizations represent nearly all aspects of the municipal securities market, including municipal securities issuers (“issuers”), broker-dealers, municipal advisors, and legal counsel.
We appreciate the SEC’s continued work to implement provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and ensure the municipal securities market remains transparent and resilient through financial turmoil. We do not, however, understand the need for the broad inclusion of municipal securities and their issuers in the proposed rule now before the SEC. We are particularly concerned about the proposal’s impact on issuers— state and local governmental entities— which mostly access the municipal market to finance critical infrastructure and community resources. These issuers may now face unnecessary liability, cost, and compliance burdens if the proposal is enacted as drafted. As such, we maintain our position, previously outlined in prior rulemaking processes, that municipal securities should be broadly excluded from the definition of asset-backed securities (“ABS”), and that issuers should be excluded from this proposal’s definition of “securitization participants” and “ABS sponsors.”