Mar. 24, 2023
March 24, 2023 This proposal allows multiple potential loopholes including but not limited to: Hedging action: This exception allows securitizers to conduct hedging to reduce related risk exposure, but could be exploited for conflicted practices. For example, a securitizer could use hedging that benefits their own interests at investors' expense in the securitization. Bona fide market making: This exception potentially allows securitizers to make a market in the securities, which could ensure liquidity and pricing stability. Despite that, it could also be used as a loophole to participate in conflicted practices. For example, a securitizer could use market manipulation for their own benefit. Certain liquidity commitments: This exception allows securitizers to make commitments to provide liquidity during market disruptions or other events. While intended to protect stability in the securitization market, it may also be a loophole to participate in conflicted practices. For example, a securitizer could use this exception to avoid losses at investors' expense in the securitization.