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Asset-backed security: Difference between revisions
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:(v) a [[CDO squared|collateralized debt obligation of collateralized debt obligations]]; and | :(v) a [[CDO squared|collateralized debt obligation of collateralized debt obligations]]; and | ||
:(vi) a security that the Commission, by rule, determines to be an asset-backed security for purposes of this section; and <br> | :(vi) a security that the Commission, by rule, determines to be an asset-backed security for purposes of this section; and <br> | ||
(B) does not include a security issued by a finance subsidiary held by the parent company or a company controlled by the parent company, if none of the securities issued by the finance subsidiary are held by an entity that is not controlled by the parent company. <ref>15 USC § 78c(a)(79) Source: https://www.law.cornell.edu/definitions/uscode.php?def_id=15-USC-1398525309-2067023687</ref>}}{{us disclaimer small}}}}{{dpn|/ˈæsɛt-bækt sɪˈkjʊərɪti/|n}} | (B) does not include a security issued by a finance subsidiary held by the parent company or a company controlled by the parent company, if none of the securities issued by the finance subsidiary are held by an entity that is not controlled by the parent company. <ref>15 USC § 78c(a)(79) Source: [https://www.law.cornell.edu/definitions/uscode.php?def_id=15-USC-1398525309-2067023687 Cornell University US Code resource]</ref>}}{{us disclaimer small}}}}{{dpn|/ˈæsɛt-bækt sɪˈkjʊərɪti/|n}} | ||
Different things to different people. In the Eastern wilds on the old side of the Atlantic, bascially any repack, securitisation, or monetisation that winds up in negotiable debt securities format will count. The Americans — don’t they always — have to be a bit more prescriptive than that — what else would regulators have to do otherwise? — and there is this definition in the federal rules (god knows which one “15 USC § 78c(a)(79)” comes from, but we think is somewhere within the general [[Securities Exchange Act of 1934|Securities Exchange Act]], [[Securities Act of 1933|Securities Act]], [[Investment Company Act of 1940|Investment Company Act]] memeplex). Note the curious reference to “[[self-liquidating financial asset]]”s, which means certain financings would be out of scope. Those of instruments that don’t pay a cashflow or have a stated maturity as such — one that leaps to mind is a carbon credit, and gold is another, as would any other non-financial commodities. | Different things to different people. In the Eastern wilds on the old side of the Atlantic, bascially any repack, securitisation, or monetisation that winds up in negotiable debt securities format will count. | ||
The Americans — don’t they always? — have to be a bit more prescriptive than that — what else would regulators have to do otherwise? — and there is this definition in the federal rules (god knows which one “15 USC § 78c(a)(79)” comes from, but we think is somewhere within the general [[Securities Exchange Act of 1934|Securities Exchange Act]], [[Securities Act of 1933|Securities Act]], [[Investment Company Act of 1940|Investment Company Act]] memeplex). Note the curious reference to “[[self-liquidating financial asset]]”s, which means certain financings would be out of scope. Those of instruments that don’t pay a cashflow or have a stated maturity as such — one that leaps to mind is a carbon credit, and gold is another, as would any other non-financial commodities. | |||
Why should this matter? Because, in America, there is rather hairy “[[risk retention rule]]” for those who would sponsor an “[[asset-backed security]]”. To qualify, the [[ABS]] needs to be of [[self-liquidating financial asset]]s that a sponsor has transferred to the issuing vehicle (i.e. and that it has not just acquired at arm’s length in the open market). | Why should this matter? Because, in America, there is rather hairy “[[risk retention rule]]” for those who would sponsor an “[[asset-backed security]]”. To qualify, the [[ABS]] needs to be of [[self-liquidating financial asset]]s that a sponsor has transferred to the issuing vehicle (i.e. and that it has not just acquired at arm’s length in the open market). | ||
We have a basic [[Asset-backed securities field guide|botanist’s guide to ABS]] here. | |||
{{sa}} | {{sa}} | ||
*[[Asset-backed securities field guide]] | |||
*[[Risk retention rule]] | *[[Risk retention rule]] | ||
*[[US private placement]] | *[[US private placement]] | ||
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{{ref}} | {{ref}} | ||
{{c|Repackaging}} | |||