The American Securitization
Forum returned to its old haunt in Las Vegas this
year for the first time since 2009. With north of 4,500 delegates
in attendance, it was hardly an intimate gathering but the
facilities at the ARIA City Centre were first class and there was
certainly ample opportunity for participants to re-connect with
their industry colleagues. The mood of the conference was similar
to last year's conference in Orlando which I would describe as
"cautiously optimistic". While there are encouraging
signs in some sectors (in particular in the auto space), it would
be difficult to conclude that the industry at large is close to
regaining its old form.
So what did I take out of this year's conference? Here are a
few of my observations:
Auto ABS in the US market appears to be alive and functioning
RMBS continues to be dormant while CMBS has a very faint pulse
(the RMBS market is hampered in part by the uncertainty surrounding
GSE reform and what the future holds for Fannie Mae and Freddie
The regulatory reforms that have been put into effect
(including mandated issuer review of assets and reporting on issuer
representations and buyback history) don't appear to be having
any material adverse impact on the level of issuance activity
There remains concern over pending regulatory reform including
in particular the proposed rules on risk retention and whether the
next phase will be the publication of final rules or a re-proposal
of revised draft rules; many observers are hoping for the latter
and an asset class-specific approach (as opposed to a one size fits
all solution across all asset classes)
The proposed Volcker rule could have unintended consequences
when it comes to the trading of securitized products; in particular
it may limit the ability of banks to provide liquidity or other
support to their bank-sponsored ABCP conduits; it could also have
an adverse effect on the ability of banks to hold or make a market
in ABS – there is a push from market participants to
exempt ABS transactions from the Volcker rule entirely
The Eurozone debt crisis may actually be a positive for the
European securitization market as investors flock to securitization
as opposed to senior unsecured debt
There is little harmony between the regulatory reform approach
taken by regulators in the U.S. and Europe which is leading to a
rising level of frustration for global players with a presence in
Stay tuned for further developments on these issues and future
developments affecting the Canadian ABS market.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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