Order Granting a Conditional Exemption From Exchange Act Section 11(d)(1) for Certain Asset Backed Securities and Other Collateral, 31019-31020 [2020-10929]

Download as PDF Federal Register / Vol. 85, No. 99 / Thursday, May 21, 2020 / Notices Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2020–45. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2020–45, and should be submitted on or before June 11, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–10935 Filed 5–20–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88884/May 15, 2020] Order Granting a Conditional Exemption From Exchange Act Section 11(d)(1) for Certain Asset Backed Securities and Other Collateral The Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) is issuing an order granting an exemption from compliance with Section 11(d)(1) of the Securities 22 17 CFR 200.30–3(a)(12), (59). VerDate Sep<11>2014 17:18 May 20, 2020 Jkt 250001 Exchange Act of 1934 (‘‘Exchange Act’’) pertaining to certain lending transactions in asset backed securities. I. Introduction By letter dated May 12, 2020 (the ‘‘Letter’’),1 the Federal Reserve Bank of New York (‘‘New York Fed’’), has requested that the Commission grant exemptive relief from Section 11(d)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) to permit all brokers and dealers registered with the Commission and designated by the New York Fed as ‘‘TALF Agents’’ (‘‘TALF Agents’’) to participate in the Federal Reserve’s 2020 Term Asset-Backed Securities Loan Facility (‘‘TALF 2020’’) by facilitating extensions of nonrecourse credit, on behalf of a special purpose vehicle (the ‘‘TALF SPV’’) established by the New York Fed, to purchasers of new issues of asset-backed securities (‘‘ABS’’) that are or that may be designated as ‘‘eligible collateral’’ in the distribution of which such TALF Agents may have participated as member of a selling syndicate or group within the meaning of Section 11(d)(l). II. Discussion Section 11(d)(1) of the Exchange Act generally prohibits a person that is both a broker and a dealer from extending or maintaining credit, or arranging for the extension or maintenance of credit, to or for a customer on any security (other than an exempted security) that was part of a distribution of a new issue of securities in which the broker-dealer participated as a member of a selling syndicate or group within thirty days prior to such transaction. The TALF 2020 is intended to support the provision of credit to consumers and businesses by enabling the issuance of ABS backed by private student loans, auto loans and leases, consumer and corporate credit card receivables, equipment loans and leases, floorplan loans, insurance premium finance loans, certain small business loans guaranteed by the Small Business Administration, and leveraged loans.2 TALF Agents will act as agents of borrowers in, among other things, making applications for TALF loans. TALF Agents will also (i) assess the eligibility of prospective borrowers and collateral, (ii) receive that 1 Letter from Michael Held, General Counsel and Executive Vice President, Federal Reserve Bank of New York to Vanessa Countryman, Secretary, Securities and Exchange Commission, dated May 12, 2020. Each defined term in this order has the same meaning as defined in the Letter, unless otherwise noted. 2 Certain legacy commercial mortgage-backed securities are also eligible ABS. The set of permissible underlying assets of eligible ABS may be expanded later to other asset classes. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 31019 portion of the interest and principal distributions on the collateral that is for the account of the borrowers, and (iii) disburse such interest and principal to the borrowers. TALF Agents will also perform certain recordkeeping functions. In addition, all payments in respect of interest and principal on the underlying collateral that are to be paid to a borrower shall be paid by the custodian to such borrower’s TALF Agent, for further distribution to that borrower. The function of the TALF Agents is necessary to the success of the TALF 2020 because the New York Fed and the TALF SPV lack the resources to perform these functions themselves. The Commission understands, based on the New York Fed statements, that the success of the TALF 2020 program depends on the effective participation of TALF Agents in facilitating the availability of the program to potential participants, and furthermore that the success of the TALF 2020 program is important to the United States Government’s efforts to restore the availability of credit in the national economy. The relief is consistent with investor protection because the TALF 2020 loans are non-recourse to the borrower, absent a breach of representation or other enforcement event under the facility documentation, and therefore neither the TALF SPV nor the New York Fed may proceed against the borrower for collection of the loan balance, irrespective of the market value or performance of the underlying collateral. Furthermore, natural persons do not qualify as participants under the TALF 2020 program. The Commission agrees that granting the requested relief is consistent with its tripartite mission. III. Conclusion In light of the above, and in accordance with Section 36 of the Exchange Act, the Commission finds that exempting brokers and dealers that are designated by the New York Fed as TALF Agents and that participate in TALF 2020 from the requirements of Section 11(d)(1) of the Exchange Act with respect to ABS that are or that may be designated as ‘‘eligible collateral’’ is necessary and appropriate in the public interest, and consistent with the mission of the Commission, including the protection of investors.3 3 Exchange Act Section 36 [15 U.S.C. 78mm]. Section 36 of the Exchange Act authorizes the Commission to conditionally or unconditionally exempt, by rule, regulation, or order any person, security, or transaction (or any class or classes of persons, securities, or transactions) from any provision of the Exchange Act or any rule or regulation thereunder, to the extent such exemption E:\FR\FM\21MYN1.SGM Continued 21MYN1 31020 Federal Register / Vol. 85, No. 99 / Thursday, May 21, 2020 / Notices It is hereby ordered, pursuant to its authority under Section 36 of the Exchange Act, based on the representations and facts presented in the Letter, that any broker-dealer that is designated as a TALF Agent and that participates in TALF 2020 by facilitating extensions of non-recourse credit, on behalf of the TALF SPV, to a purchaser of new issues of securities is exempt from the prohibition on arranging certain credit contained in Section 11(d)(1) with respect to ABS securities that are or that may be designated as designated as ‘‘eligible collateral.’’ This exemption from Section 11(d)(1) of the Exchange Act applies solely to such TALF Agent’s facilitation of extensions and maintenance of credit by the New York Fed pursuant to the TALF 2020 with respect to ABS that are or that may be designated as ‘‘eligible collateral,’’ and not to any other extension or maintenance of credit, or any other arranging for the extension or maintenance of credit, on new issues of securities in the distribution of which such TALF Agent participated as a member of a selling syndicate or group within the meaning of Section 11(d)(1) of the Exchange Act. This order should not be considered a view with respect to any other question that participation in TALF 2020 program may raise, including, but not limited to the applicability of other federal or state laws to such participation. For the Commission, by the Division of Trading and Markets pursuant to delegated authority.4 J. Matthew DeLesDernier, Assistant Secretary. Description of Collection [FR Doc. 2020–10929 Filed 5–20–20; 8:45 am] BILLING CODE 8011–01–P SURFACE TRANSPORTATION BOARD 60-Day Notice of Intent To Seek Extension of Approval: Complaints Surface Transportation Board. Notice and request for comments. AGENCY: ACTION: As required by the Paperwork Reduction Act of 1995 (PRA), the Surface Transportation Board (STB or Board) gives notice of its intent to seek approval from the Office of Management and Budget (OMB) for an extension of the collection of Complaints, as described below. SUMMARY: is necessary or appropriate in the public interest, and is consistent with the protection of investors. 4 17 CFR 200.30–3(a)(62). VerDate Sep<11>2014 17:18 May 20, 2020 Jkt 250001 Comments on this information collection should be submitted by July 20, 2020. ADDRESSES: Direct all comments to Chris Oehrle, Surface Transportation Board, 395 E Street SW, Washington, DC 20423–0001, or to PRA@stb.gov. When submitting comments, please refer to ‘‘Paperwork Reduction Act Comments, Complaints.’’ For further information regarding this collection, contact Michael Higgins, Deputy Director, Office of Public Assistance, Governmental Affairs, and Compliance, at (202) 245–0284 or at Michael.Higgins@stb.gov. Assistance for the hearing impaired is available through the Federal Relay Service at (800) 877–8339. SUPPLEMENTARY INFORMATION: Comments are requested concerning: (1) The accuracy of the Board’s burden estimates; (2) ways to enhance the quality, utility, and clarity of the information collected; (3) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology, when appropriate; and (4) whether the collection of information is necessary for the proper performance of the functions of the Board, including whether the collection has practical utility. Submitted comments will be summarized and included in the Board’s request for OMB approval. DATES: Title: Complaints under 49 CFR 1111. OMB Control Number: 2140–0029. STB Form Number: None. Type of Review: Extension without change. Respondents: Affected shippers, railroads and communities that seek redress for alleged violations related to unreasonable rates, unreasonable practices, service issues, and other statutory claims. Number of Respondents: Four. Estimated Time per Response: 467 hours. Frequency: On occasion. For years 2017–2019, respondents filed an average of four complaints of this type with the Board. Total Burden Hours (annually including all respondents): 1,876 (estimated hours per complaint (467) × average number of complaints (4)). Total ‘‘Non-hour Burden’’ Cost: $5,848 (estimated non-hour burden cost per complaint ($1,462) × average number of complaints (4)). Needs and Uses: Under the Board’s regulations, persons may file complaints PO 00000 Frm 00096 Fmt 4703 Sfmt 9990 before the Board pursuant to 49 CFR part 1111 seeking redress for alleged violations of provisions of the Interstate Commerce Act, 49 U.S.C. 10101 et seq. The required content of a complaint is outlined at 49 CFR 1111.1(a). Generally, the most significant complaints filed at the Board allege that railroads are charging unreasonable rates or that they are engaging in unreasonable practices. The collection by the Board of these complaints, and the agency’s action in conducting proceedings and ruling on the complaints, enables the Board to meet its statutory duty to regulate the rail industry. In two notices of proposed rulemakings, Final Offer Rate Review, EP 755 et al. (84 FR 48872 (Sept. 17, 2019)); and Market Dominance Streamlined Approach, EP 756 (84 FR 48882 (Sept. 17, 2019)), the Board is proposing new rules that are intended to simplify and streamline certain complaint proceedings. The Board has submitted to OMB an interim request for modification and extension of the existing collection and has received comments, which it is reviewing. The Board will submit its requests for modification of this collection once the final rules are decided. Under the PRA, a federal agency that conducts or sponsors a collection of information must display a currently valid OMB control number. A collection of information, which is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c), includes agency requirements that persons submit reports, keep records, or provide information to the agency, third parties, or the public. Under 44 U.S.C. 3506(c)(2)(A), federal agencies are required to provide, prior to an agency’s submitting a collection to OMB for approval, a 60-day notice and comment period through publication in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information. Dated: May 18, 2020. Jeffrey Herzig, Clearance Clerk. [FR Doc. 2020–11002 Filed 5–20–20; 8:45 am] BILLING CODE 4915–01–P E:\FR\FM\21MYN1.SGM 21MYN1

Agencies

[Federal Register Volume 85, Number 99 (Thursday, May 21, 2020)]
[Notices]
[Pages 31019-31020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10929]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88884/May 15, 2020]


Order Granting a Conditional Exemption From Exchange Act Section 
11(d)(1) for Certain Asset Backed Securities and Other Collateral

    The Securities and Exchange Commission (``Commission'' or ``SEC'') 
is issuing an order granting an exemption from compliance with Section 
11(d)(1) of the Securities Exchange Act of 1934 (``Exchange Act'') 
pertaining to certain lending transactions in asset backed securities.

I. Introduction

    By letter dated May 12, 2020 (the ``Letter''),\1\ the Federal 
Reserve Bank of New York (``New York Fed''), has requested that the 
Commission grant exemptive relief from Section 11(d)(1) of the 
Securities Exchange Act of 1934 (``Exchange Act'') to permit all 
brokers and dealers registered with the Commission and designated by 
the New York Fed as ``TALF Agents'' (``TALF Agents'') to participate in 
the Federal Reserve's 2020 Term Asset-Backed Securities Loan Facility 
(``TALF 2020'') by facilitating extensions of non-recourse credit, on 
behalf of a special purpose vehicle (the ``TALF SPV'') established by 
the New York Fed, to purchasers of new issues of asset-backed 
securities (``ABS'') that are or that may be designated as ``eligible 
collateral'' in the distribution of which such TALF Agents may have 
participated as member of a selling syndicate or group within the 
meaning of Section 11(d)(l).
---------------------------------------------------------------------------

    \1\ Letter from Michael Held, General Counsel and Executive Vice 
President, Federal Reserve Bank of New York to Vanessa Countryman, 
Secretary, Securities and Exchange Commission, dated May 12, 2020. 
Each defined term in this order has the same meaning as defined in 
the Letter, unless otherwise noted.
---------------------------------------------------------------------------

II. Discussion

    Section 11(d)(1) of the Exchange Act generally prohibits a person 
that is both a broker and a dealer from extending or maintaining 
credit, or arranging for the extension or maintenance of credit, to or 
for a customer on any security (other than an exempted security) that 
was part of a distribution of a new issue of securities in which the 
broker-dealer participated as a member of a selling syndicate or group 
within thirty days prior to such transaction.
    The TALF 2020 is intended to support the provision of credit to 
consumers and businesses by enabling the issuance of ABS backed by 
private student loans, auto loans and leases, consumer and corporate 
credit card receivables, equipment loans and leases, floorplan loans, 
insurance premium finance loans, certain small business loans 
guaranteed by the Small Business Administration, and leveraged 
loans.\2\ TALF Agents will act as agents of borrowers in, among other 
things, making applications for TALF loans. TALF Agents will also (i) 
assess the eligibility of prospective borrowers and collateral, (ii) 
receive that portion of the interest and principal distributions on the 
collateral that is for the account of the borrowers, and (iii) disburse 
such interest and principal to the borrowers. TALF Agents will also 
perform certain recordkeeping functions. In addition, all payments in 
respect of interest and principal on the underlying collateral that are 
to be paid to a borrower shall be paid by the custodian to such 
borrower's TALF Agent, for further distribution to that borrower. The 
function of the TALF Agents is necessary to the success of the TALF 
2020 because the New York Fed and the TALF SPV lack the resources to 
perform these functions themselves.
---------------------------------------------------------------------------

    \2\ Certain legacy commercial mortgage-backed securities are 
also eligible ABS. The set of permissible underlying assets of 
eligible ABS may be expanded later to other asset classes.
---------------------------------------------------------------------------

    The Commission understands, based on the New York Fed statements, 
that the success of the TALF 2020 program depends on the effective 
participation of TALF Agents in facilitating the availability of the 
program to potential participants, and furthermore that the success of 
the TALF 2020 program is important to the United States Government's 
efforts to restore the availability of credit in the national economy. 
The relief is consistent with investor protection because the TALF 2020 
loans are non-recourse to the borrower, absent a breach of 
representation or other enforcement event under the facility 
documentation, and therefore neither the TALF SPV nor the New York Fed 
may proceed against the borrower for collection of the loan balance, 
irrespective of the market value or performance of the underlying 
collateral. Furthermore, natural persons do not qualify as participants 
under the TALF 2020 program. The Commission agrees that granting the 
requested relief is consistent with its tripartite mission.

III. Conclusion

    In light of the above, and in accordance with Section 36 of the 
Exchange Act, the Commission finds that exempting brokers and dealers 
that are designated by the New York Fed as TALF Agents and that 
participate in TALF 2020 from the requirements of Section 11(d)(1) of 
the Exchange Act with respect to ABS that are or that may be designated 
as ``eligible collateral'' is necessary and appropriate in the public 
interest, and consistent with the mission of the Commission, including 
the protection of investors.\3\
---------------------------------------------------------------------------

    \3\ Exchange Act Section 36 [15 U.S.C. 78mm]. Section 36 of the 
Exchange Act authorizes the Commission to conditionally or 
unconditionally exempt, by rule, regulation, or order any person, 
security, or transaction (or any class or classes of persons, 
securities, or transactions) from any provision of the Exchange Act 
or any rule or regulation thereunder, to the extent such exemption 
is necessary or appropriate in the public interest, and is 
consistent with the protection of investors.

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[[Page 31020]]

    It is hereby ordered, pursuant to its authority under Section 36 of 
the Exchange Act, based on the representations and facts presented in 
the Letter, that any broker-dealer that is designated as a TALF Agent 
and that participates in TALF 2020 by facilitating extensions of non-
recourse credit, on behalf of the TALF SPV, to a purchaser of new 
issues of securities is exempt from the prohibition on arranging 
certain credit contained in Section 11(d)(1) with respect to ABS 
securities that are or that may be designated as designated as 
``eligible collateral.''
    This exemption from Section 11(d)(1) of the Exchange Act applies 
solely to such TALF Agent's facilitation of extensions and maintenance 
of credit by the New York Fed pursuant to the TALF 2020 with respect to 
ABS that are or that may be designated as ``eligible collateral,'' and 
not to any other extension or maintenance of credit, or any other 
arranging for the extension or maintenance of credit, on new issues of 
securities in the distribution of which such TALF Agent participated as 
a member of a selling syndicate or group within the meaning of Section 
11(d)(1) of the Exchange Act.
    This order should not be considered a view with respect to any 
other question that participation in TALF 2020 program may raise, 
including, but not limited to the applicability of other federal or 
state laws to such participation.
---------------------------------------------------------------------------

    \4\ 17 CFR 200.30-3(a)(62).

    For the Commission, by the Division of Trading and Markets 
pursuant to delegated authority.\4\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10929 Filed 5-20-20; 8:45 am]
BILLING CODE 8011-01-P