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New rule a danger to securitisation

Staff Reporter 1 minute read

By: Staff Reporter

There is concern that Australian banks and non-bank lenders who raise funds by securitising their loan book could get caught up in a new set of rules created by the US Securities and Exchange Commission (SEC).

According to a report in The Australian Financial Review, the new SEC rule, known as 17g-5, is designed to curb the power of the big three agencies – Standard & Poor’s, Moody’s Investor Service and Fitch Ratings.

Under the rule, anyone seeking a credit rating for mortgage backed securities or any other type of asset backed securities must make all the information given to one credit agency available to all three.

While it is unclear whether or not the new rule will apply to countries outside the US, the Australian Securitisation Forum has said the rule, if applied in Australia, could give rise to “significant operational issues and will delay transactions in what is already a fragile, but recovering, market”.

The ASF has written to the SEC urging it to only apply the rule within the US.

“In considering our request we ask the commission to please bear in mind the potential significant impact of the rule on the Australian securitisation market and other non-US securitisation markets, and in turn, the amount of finance available to fund future economic growth,” the ASF said.

New rule a danger to securitisation
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