CSA Proposes New Regime For Securitized Products

The Canadian Securities Administrators ("CSA") have published, for a 90‐day comment period (expiring July 1, 2011), proposed new rules that will fundamentally change the existing regulatory framework applicable to the offering of securitized products in Canada. The proposal would impact securitized products offered by prospectus as well as those offered in the exempt market.

Securitization refers to the process by which a special purpose vehicle is used to create securities that entitle holders to payments that are supported by the cash flow from a pool of financial assets held by the special purpose vehicle. In Canada, common types of financial assets include credit card receivables, automobile leases and residential mortgages. Less frequently, the assets may themselves be securitized products, such as residential mortgage‐backed securities, or may be "synthetic assets" created through the use of derivatives.