The Securities and Exchange Commission (SEC) would violate the Tower Amendment and the principles of federalism if it applies its proposed rules on ABS to municipal bonds, 14 market groups warned this week.

The groups, which represent municipal issuers, broker-dealers and financial advisers, issued the warning in a five-page comment letter they sent to the SEC Monday urging it to exclude munis from the two sets of ABS rules proposed on Oct. 4 and Oct. 13.

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