Securitization reform legislation approved by U.S. Senate
On July 15, the U.S. Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed by the House of Representatives on June 30. The legislation is intended to overhaul the financial system in the U.S. by improving the supervision and regulation of federal depository institutions, providing transparency to derivatives markets and setting out obligations regarding corporate governance and executive compensation.
The legislation also contains provisions directed specifically at the securitization industry and its perceived inherent flaws. Many of these provisions cover territory touched upon in April by the Securities and Exchange Commission (SEC) in its proposed rules, including, most notably, those dealing with a proposed mandatory risk retention requirement and increased disclosure and reporting requirements. It remains to be seen how deeply the SEC proposals and the Dodd-Frank Act provisions will influence the Canadian Securities Administrators’ forthcoming proposals regarding securitized products, as related in CSA Staff Notice 45-307 Regulatory Developments Regarding Securitization. To date, there have been no indications from any of the applicable Canadian legislative bodies that they may be contemplating legislation containing provisions relating specifically to securitizations comparable to those of the Dodd-Frank Act.
