U.S. Financial Industry Developments
CFTC Reduces Risk for Customer Funds Held by Derivatives Clearing Organizations by Expanding Investment Options
On July 19, 2018, the Commodity Futures Trading Commission (the "CFTC") approved an order that allows registered derivatives clearing organizations ("DCOs") to invest customer euro cash in French and German sovereign debt. Allowing DCOs to invest customer euro cash in high-quality European sovereign debt poses less risk than the current practice of holding customer euro cash at commercial banks. To read the full release, click here.
Rating Agency Developments
On July 25, DBRS published an update in its methodology for rating Canadian public pension funds and related exclusive asset managers. Release.
On July 23, Fitch published a criteria report outlining Fitch's methodology for rating U.S. residential mortgage-backed securities ("RMBS"). Report.
On July 19, DBRS published an update to its methodology for rating collateralized loan obligations ("CLOs") backed by loans to European small and medium-sized enterprises ("SMEs"). Release.
On July 19, Fitch published a criteria report detailing Fitch's methodology for analyzing portfolios of corporate credit for rating CLOs and other collateralized debt obligations ("CDOs"). Report.
On July 19, Fitch published rating criteria for notes that rely on the performance of all parties to a one-, two- or three-party transaction ("credit-linked swaps" or "first-to-default swaps"). Report.
RMBS and Other Securities Litigation
U.S. Bank and UBS Reach $850M Settlement in RMBS Put-Back Action
On July 25, 2018, U.S. Bank NA and UBS AG announced they had reached an $850 million settlement in connection with a dispute over loans in three residential mortgage-backed securities trusts. U.S. Bank filed suit against UBS in the Southern District of New York in 2012 seeking $2 billion for UBS's alleged breach of representations and warranties about those loans. Following a three-week bench trial in 2016, U.S. District Judge P. Kevin Castel held that UBS had breached representations and warranties in certain respects and appointed special master Barbara S. Jones to review breach allegations concerning thousands of individual loans and issue a recommendation regarding liability and damages as to each loan. Order.
