A National Association of Securities Dealers proposal could delay the speed at which new deals are brought to the market by subjecting some underwriting fees to review, claims The Bond Market Association. The dealer-backed trade group is objecting to the NASD plan, which calls for a review of fees on high-grade deals if banks have an affiliation or potential conflict of interest with an issuer.
Under current regulations, all investment-grade offerings are exempt from review because fees are typically quite low and determined by market conditions. The proposal could also crimp high-yield deals, TBMA argues, because it would require additional 24-hour review period if another underwriter were named to the deal at the last minute.
"The purpose of the proposal is to streamline and make simpler the whole process but these aspects do the reverse," said Michele David, v.p. and assistant general counsel at TBMA. She stressed even a brief 24-hour review period would crimp an issuer's ability to fund into a rapidly moving market.
TBMA has submitted a comment letter to the Securities and Exchange Commission, is advocating its position to the market and will likely meet with the SEC officials to discuss its objections. David expects the SEC to act within the next month. Tom Holloman, spokesman for the NASD, declined comment.
