Third Letter to US Federal Regulators on Ownership Interests in Connection with Certain CLO Debt Securities

SIFMA, the Loan Syndications and Trading Association (LSTA), the Structured Finance Industry Group (SFIG), and The Financial Services Roundtable (FSR) provide additional comments to the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) (collectively, the Agencies) in connection with certain aspects of the final rule implementing the Volcker Rule, adopted by the respective agencies (Agencies) on December 10, 2013.

The Associations’ first comments were filed December 24, 2013.

The groups’ second set of comments were filed December 31, 2013.

In this third set of comments the groups clarify certain aspects of previous letters and discussions with the regulators, and to propose language that would confirm, in a (frequently asked questions (FAQ) or other appropriate interpretive guidance, that the term “ownership interest” as defined in the final rule implementing the Volcker Rule does not include debt securities of collateralized loan obligation (CLO) issuers that are covered funds, solely because they have the creditor-protective rights described below, whether or not an event of default or acceleration event exists under the CLO indenture.