Mar. 19, 2023
Dear Ms. Vanessa Countryman, Secretary of the Securities and Exchange Commission, I am writing to express my concerns and share my thoughts regarding the Proposed Rule S7-01-23, "Prohibition Against Conflicts of Interest in Certain Securitizations." As an individual investor, I believe it is essential to maintain fair and transparent financial markets, and I am concerned that the proposed rule may inadvertently create loopholes that could undermine the stability and integrity of these markets. While I appreciate the intention to prohibit conflicts of interest in securitizations, I am concerned about the exceptions outlined in the proposed rule, specifically: Risk-mitigating hedging activities Bona fide market-making activities Liquidity commitments These exceptions, while seemingly reasonable at first glance, may be exploited by certain market participants to continue engaging in activities that have the potential to destabilize the market and harm individual investors. In order to protect the interests of individual investors and ensure a stable financial environment, I respectfully request that the Commission carefully consider the following recommendations: Clearly define and limit the scope of the exceptions to prevent potential abuse by market participants. Establishing precise guidelines and criteria will help prevent these exceptions from being misused. Require securitization participants to disclose their risk-mitigating hedging activities, bona fide market-making activities, and liquidity commitments in a transparent and accessible manner. This will enable investors and regulators to better understand and monitor the activities being undertaken by these participants. Strengthen the compliance programs required for securitization participants relying on these exceptions. Such programs should include stringent written policies and procedures, regular audits, and robust reporting mechanisms to ensure adherence to the conditions of the exceptions. By addressing these concerns, the Commission can help ensure that the Proposed Rule S7-01-23 effectively prevents conflicts of interest in securitizations and maintains the stability and fairness of the financial markets. I appreciate the opportunity to share my comments and urge the Commission to consider these recommendations before finalizing the rule. Thank you for your attention to this important issue. Sincerely, Elias Hautala