Bloomberg News

Mortgage Bond Disclosures, Shariah Deposits: Compliance

August 26, 2014

Sellers of bonds backed by mortgages and auto loans would have to give investors details including the borrowers’ income and credit scores under rules the U.S. Securities and Exchange Commission is poised to consider, according to two people briefed on the plan.

The SEC will vote tomorrow on the final rules, which were mandated by the Dodd-Frank Act after investors were burned by soured debt sold by Wall Street before the 2008 credit crisis. The biggest sellers of asset-backed securities include Bank of America Corp. (BAC:US), JPMorgan Chase & Co. (JPM:US), Deutsche Bank AG, Citigroup Inc. (C:US) and Goldman Sachs Group Inc. (GS:US)

Securities backed by loans for houses, autos and commercial real estate would fall under the rules, which require more extensive disclosure to bond buyers than the SEC’s initial 2010 plan, said the people, speaking on condition of anonymity because the details aren’t public.

An SEC spokeswoman, Gina Talamona, declined to comment on the rules.

Compliance Policy

Malaysia Takes Lead Protecting Shariah Deposits

Malaysia is taking the lead in the Islamic banking world by tightening the classification of deposits and offering government guarantees to protect savers.

Shariah-compliant lenders have until June to comply with the Islamic Financial Services Act 2013 giving investors the option to choose how their cash is used. The measure is aimed at increasing transparency for customers who may want to put money either in safer deposits or free it up for investment under laws that prohibit interest payments and encourage risk sharing.

The act may affect the level of deposits in the short term as it will take time for customers to familiarize themselves with the ruling, according to CIMB Islamic Bank Bhd., which has complied with the new regulation and saw growth ease to 7 percent in 2013 from 15 percent a year earlier.

Bank Negara Malaysia is the first monetary authority in the world to implement such a rule for Islamic banks as it seeks to enhance its status as a Shariah financing hub.

Separately, Egypt is seeking to revive efforts to issue bonds that adhere to Islam’s ban on interest a year after the overthrow of the Muslim Brotherhood-led government derailed plans for a debut sovereign sale.

The Egyptian Financial Supervisory Authority, the country’s market regulator, last week sent a draft sukuk law to the Ministry of Investment for approval, proposing to cancel regulations from 2013 and set up new rules for the sale of Islamic bonds.

Establishing an Islamic finance regime may help Egypt and its companies tap Shariah-compliant investors as confidence in the nation’s ability to repay its debt rises.

Compliance Action

Coca-Cola Faces Preliminary Swiss Probe Over Parallel Imports

The Swiss competition authority opened a preliminary probe into whether The Coca-Cola Co. (KO:US)’s local unit blocked parallel imports to Switzerland, said Kenji Izumi, an official at the authority.

Weko, as the authority is known in German, is gathering facts and will open an investigation if the evidence warrants one, Izumi said in a phone interview.

Coca-Cola’s Swiss unit may have had agreements with Coca-Cola units in Germany, Austria, Italy and France to prevent them from selling cheaper supplies to Swiss distributors, AWP newswire said yesterday.

Denner AG, which owns and manages retail food stores in Switzerland, has imported Coke bottles from Czech Republic since the start of the year, the news service reported.

Coca-Cola’s Swiss office in Bruettisellen didn’t immediately respond to requests for comment about the preliminary probe.

Comings and Goings

CFTC Names Kirkpatrick to Head Office of the Secretariat

The Commodity Futures Trading Commission named Christopher J. Kirkpatrick to lead the Office of the Secretariat, the agency said in a statement.

The Office of the Secretariat manages how matters are brought before the commission for consideration and action as it continues to implement the Dodd-Frank Act. Kirkpatrick also will be responsible for maintaining the commission’s records.

Kirkpatrick joined the commission in February 2013. He previously was an attorney-adviser for the U.S. Chemical Safety and Hazard Investigation Board.

To contact the reporter on this story: Carla Main in New Jersey at cmain2@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Charles Carter, Joe Schneider


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Companies Mentioned

  • BAC
    (Bank of America Corp)
    • $16.26 USD
    • 0.05
    • 0.31%
  • JPM
    (JPMorgan Chase & Co)
    • $56.63 USD
    • 0.43
    • 0.76%
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