Bram Smith, the executive director of the Loan Syndications and Trading Association (LSTA), yesterday testified before a congressional subcommittee, arguing against proposed rules that would require CLO managers to retain a 5% interest in their funds.

“Attempting to apply the risk retention rules to CLOs is like trying to fit a square peg into a round hole. They simply don’t fit,” Smith told the House Subcommittee on Capital Markets. “The proposal, as currently drafted, would have a profoundly negative impact on CLOs – indeed, it could basically end CLO formation entirely.”

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