The Securities and Exchange Commission proposed a rule yesterday to ban asset-backed securities (ABS) issuers from being involved in any transactions of securities they created within a one-year period, calculated from the day the ABS was sold. The regulator said the 127B rule should help avoid any conflict of interest to ABS’ investors.
According to the SEC, exceptions will be allowed for risk-mitigating hedging activities, liquidity commitments, and market making done in good faith.
