The Structured Finance Industry Group had their SFIG Vegas 2017 Conference at the Aria Resort & Casino in Las Vegas from February 26th to March 1st  – around 7,000 ABS market professionals attended including investors, issuers, financial intermediaries, regulators, law firms, accounting firms, technology firms, rating agencies, servicers and trustees.

 

The impact of finance regulation was the hot topic at SFIG 2017 with a consensus on less supervision and enforcement. However, there was no consensus on how regulations and rules under Obama will be changed by the new Trump administration. Some of the changes may well include the Dodd Frank act rollback, CFPB reform, fiduciary rule suspension and paring of risk retention rules, with almost all aspects of the regulatory regime open for discussion.

 

Although not as big a focus as it was in last year’s conference, market place lending issuance increased by 59% (Source: PeerIQ tracker – YoY). Prosper and other platforms are expected to launch ABS programs in 2017. Some interest in public issuance under Reg AB but due to CEO certification requirement will probably continue with Reg 144A. One panel suggested the market place lenders are becoming more of an extension of traditional lending and questioned whether connecting borrowers and lenders over the internet offered value.

 

A relatively new theme at this year’s SFIG Conference was blockchain technology. The Chamber of Digital Commerce and SFIG announced the formation of a strategic partnership focused on advancing the use of blockchain technology in securitization markets. The technology is expected to be an opportunity for reinvention across the structured finance industry. Some of the distinct benefits of blockchain according to a white paper presentation by Deloitte include:

  • Single, consistent source of information
  • Complete, immutable audit trail
  • Better valuation and price discovery
  • Speed and certainty
  • Security

Lastly, speakers on other panels discussed/suggested:

  • that major changes in student loan programs are not expected to be enacted this year;
  • subprime auto net losses are rising despite positive economic environment;
  • AAA CLO spreads tightening due primarily to issuance declines;
  • investors overwhelmingly like “skin in the game rules” while smaller issuers (especially certain CLO managers) are having trouble raising the capital
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Thanks, Ken

Ken Margolis | Managing Partner Castle Placement, LLC
1460 Broadway Street, Rte 400
New York, New York 10036
(212) 418-1188 | C: (516) 712-7784
kmargolis@castleplacement.com

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