Page 11 - June 2018

SEC Proposes Modifications to the Commission materials will no longer be compiled
Definition of “Agency Debt Security.” and published as the “SEC Docket,” but will continue
to be available on the SEC public website. The
The Securities and Exchange Commission (SEC) amendments are effective 06/01/2018. The notice
proposed amendments to FINRA Rule 6710 to may be viewed at:
modify the definition of “Agency Debt Security.” https://www.gpo.gov/fdsys/pkg/FR-2018-06-
FINRA requires members to report to the Trade 01/pdf/2018-11618.pdf. Federal Register, Vol. 83,
Reporting and Compliance Engine (TRACE) No. 106, 06/01/2018, 25365-25366.
transactions in Agency Debt Securities, which
includes those debt securities issued or guaranteed by FASB Issues Statement of Federal
a Government-Sponsored Enterprise (GSE). Fannie Financial Accounting Standards.
Mae and Freddie Mac, both of which are GSEs,
announced changes relating to the issuance structure The Federal Accounting Standards Advisory Board
of their credit risk transfer securities (CRTs). (FASB) has issued Statement of Federal Financial
Currently, Fannie and Freddie issue CRTs as direct Accounting Standards 55, Amending Inter-entity Cost
debt obligations, and therefore CRTs fall within the Provisions. The Statement is available on the FASB
definition of “Agency Debt Security” for purposes of website at http://www.fasab.gov/accounting-
TRACE data categorization and dissemination. standards/. The notice may be viewed at:
FINRA understands that under the new issuance https://www.gpo.gov/fdsys/pkg/FR-2018-06-
structure, CRTs will be issued by a Fannie- or 07/pdf/2018-12265.pdf. Federal Register, Vol. 83,
Freddie-sponsored trust rather than directly by Fannie No. 110, 06/07/2018, 26457.
or Freddie, and proceeds from the sale of the CRTs
will be placed in a trust account and managed by a FASB Proposes Staff Implementation
third-party trustee. As a result of CRTs being issued Guidance 6.1.
by a trust sponsored by a GSE instead of directly
issued by a GSE, CRTs would no longer fall within FASB issued proposed Staff Implementation
the technical definition of “Agency Debt Security” Guidance (SIG) 6.1, Clarification of Paragraphs 40–
and would be considered corporate debt for TRACE 41 of SFFAS 6, Accounting for Property, Plant, and
data and dissemination purposes. This outcome Equipment. The proposed SIG is available on the
would be problematic for TRACE subscribers FASB website at http://www.fasab.gov/documents-
consuming data related to CRTs because transactions forcomment/. Comments are due 05/31/2018. The
in CRTs would no longer be disseminated as part of notice may be viewed at:
the Agency Debt data set. In addition, the TRACE https://www.gpo.gov/fdsys/pkg/FR-2018-05-
system would apply the corporate, rather than 18/pdf/2018-10663.pdf. Federal Register, Vol. 83,
Agency, debt transaction size dissemination cap for No. 97, 05/18/2018, 23275.
unrated securities, specifically a $1 million
dissemination cap for unrated corporate debt versus NCUA Finalizes Amendments to
$5 million for unrated Agency Debt Securities. Thus,
classifying CRTs as corporate debt would decrease Involuntary Liquidation of Credit Unions
transparency as to the actual size of the transaction and Claims Procedures.
given that unrated corporate debt is disseminated
with the $1, rather than $5, million dissemination The National Credit Union Administration (NCUA)
cap. Comments are due 06/14/2018. The notice may finalized amendments to part 709 of its rules to
be viewed at: https://www.gpo.gov/fdsys/pkg/FR- update and clarify the procedures that apply to claims
2018-05-24/pdf/2018-11093.pdf. Federal Register, administration for federally insured credit unions that
Vol. 83, No. 101, 05/24/2018, 24143-24145. enter involuntary liquidation. Specifically, the final
rule amends the payout priority provision by
SEC Issues Technical Amendments to specifying the conditions that claims in the nature of
Rules of Practice and Rules of severance must meet to be allowed as provable
Organization; Conduct and Ethics; and claims. The final rule is effective 06/29/2018. The
notice may be viewed at:
Information and Requests. https://www.gpo.gov/fdsys/pkg/FR-2018-05-
30/pdf/2018-11588.pdf. Federal Register, Vol. 83,
SEC is making technical amendments to certain rules No. 104, 05/30/2018, 24651-24652.
of organization and rules of practice to indicate that

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