Magazine article American Banker

US Trade Group Fears Overhaul of UK Financial Laws Will Hurt Sales of Fannie Mae, Other US Agency Securities

Magazine article American Banker

US Trade Group Fears Overhaul of UK Financial Laws Will Hurt Sales of Fannie Mae, Other US Agency Securities

Article excerpt

US Trade Group Fears Overhaul of UK Financial Laws Will Hurt Sales of Fannie Mae, Other US Agency Securities

The Public Securities Association is voicing concern that the growing overseas market for U.S. agency securities could be impaired by the Financial Services Bill pending in Britain.

The British effort is expected to result in a major overhaul of that country's financial laws. A key problem cited by the U.S. trade group is that the bill as now written would treat securities of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corp., and the Student Loan Marketing Association as "private' rather than "government' securities.

Public Securities Association general counsel Robert A. Portnoy said such a classification could mean that dealers of agency securities would have to file prospectuses and comply with advertising restrictions in the same fashion as other private instruments.

In the United States, agency securities are exempted from filing prospectuses with the Securities and Exchange Commission, unlike corporate stocks and bonds. In addition, firms that deal exclusively in agency securities need not register with the SEC, although this would change if pending government securities legislation is enacted.

Mr. Portnoy added that the "more significant impact may be that [the bill] would mark official recognition by the United Kingdom that they are not federal agency securities. Because of the precedent it could set for investors in Europe in general, and on a global basis, it might impair the fungibility between the domestic [agency securities] market and overseas. …

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