Issuers using document automation tools are better prepared for the renewed regulatory focus on disclosure in retail offerings.
On June 17, 2009, the U.S. government released a white paper called “Financial Regulatory Reform: A New Foundation” (the “White Paper”), which contains a proposal for reforming the U.S. financial regulatory system. The purpose of this news flash is to highlight several aspects of the White Paper that may have implications for banks’ documentation practices.
The proposal would create a separate Consumer Financial Protection Agency with rule-making and enforcement authority, responsible for both substantive regulation of financial products and related disclosure. The creation of this new agency will undoubtedly bring a renewed focus on disclosure practices. While any rules adopted in this area will primarily apply to the retail market, they are likely to change practices in the institutional segment as well. This was the case, e.g., when the SEC published its Plain English Handbook in 1998. Originally intended to improve documentation practices in public offerings, the rules have become the de facto disclosure standard and led to a significant improvement in the quality of the documents used in private placements.
The enhanced focus on disclosure will benefit issuers who use document automation tools to control the quality of their offering documents. Because the use of such tools not only yields efficiency gains but enforces a high degree of standardization, issuers can be sure that whatever disclosure they wish to adopt will be applied uniformly across all of their trades.
Another noteworthy aspect of the proposal is its focus on “plain vanilla” financial products. While an emphasis on simpler, more understandable products will yield benefits for consumers, it may also translate into a higher number of transactions and lower average deal sizes. This trend, combined with the reduced complexity of the trades in question, will open up a greater universe of financial products to document automation.
WallStreetdocs is a pioneer in the field of automating the documentation of debt issuances, from simple bonds to complex structured financial products. If you would like to learn more about WallStreetdocs and how it can be used to automate documentation workflows, please contact us on +44 (0)845 467 0142 or at info@wallstreetdocs.com.
WallStreetdocs is an innovative document automation solution designed from the ground up for capital markets transactions. WallStreetdocs enables its clients in the banking and legal industries to achieve significant efficiency gains by helping them generate better and more consistent documents in substantially less time and increase profit margins by dramatically reducing transaction costs.
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