November 8, 1996



Mr. Jonathan G. Katz
Secretary
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re:  Securities Act Concepts and Their Effects on
Capital Formation (Release No. 33-7314) (File No. S7-
19-96)

Dear Mr. Katz:

       PSA   The  Bond  Market  Trade  Association  ("PSA")1
appreciates  this opportunity to comment to  the  Securities
and  Exchange Commission (the "Commission" or "SEC") on  the
Commission's  Concept Release: Securities Act  Concepts  and
Their  Effects  on  Capital Formation (Release  No.  33-7314
(July  25,  1996)) (the "Concept Release").  PSA  wishes  to
praise  the  Commission and its Staff on  the  comprehensive
review  they  have undertaken of the U.S. capital  formation
methods  and  markets.   We believe that  the  work  of  the
Commission and Staff in connection with the Concept Release,
as  well  as  the  efforts of the Task Force  on  Disclosure
Simplification (the "Task Force") and the Advisory Committee
on  the  Capital  Formation  and Regulatory  Processes  (the
"Advisory  Committee"), will help to preserve the  integrity
of  the U.S. capital markets and keep them the strongest, as
well as most transparent and liquid, in the world.

      This  comment  letter is organized  in  two  sections,
corresponding  to the markets represented by  PSA  that  are
significantly  impacted by the proposals  contained  in  the
Concept Release.  The first section responds broadly to  the
Concept  Release from the perspective of the  membership  of
PSA's  Corporate Bond Division, which includes bulge bracket
firms, brokers' brokers and regional fixed income securities
dealers.  The activities of the Corporate Bond Division  are
governed by an Executive Committee, the members of which are
listed on an attachment to this comment letter.2
     
     The  second  section  of  the letter  responds  to  the
Concept  Release from the perspective of PSA's Mortgage  and
Asset-Backed  Securities  Division.   This  portion  of  the
letter  is  based upon input provided by an ad hoc Mortgage-
and Asset-Backed Securities Regulatory Task Force, comprised
of   senior   business  and  legal  professionals   from   a
representative  group  of  PSA member  firms  that  actively
participate   in   the  mortgage-backed   and   asset-backed
securities  ("MBS"  and "ABS", respectively)  markets.   PSA
organized this Task Force both for the purpose of responding
to  the issues raised in the Concept Release, as well as  to
respond   to   the  Staff's  invitation  to  provide   PSA's
suggestions on possible reforms to current disclosure  rules
and practices applicable to MBS and ABS.  These latter views
were  recently  communicated to  the  Staff  in  a  separate
letter,3  which  overlaps somewhat with the  subject  matter
addressed  by  the second section of this letter.   However,
PSA's  members that are active in the mortgage-  and  asset-
backed  securities  markets believe  that  it  is  vital  to
respond  specifically  to certain issues  addressed  in  the
Concept Release, for two principal reasons.
     
     First,  although  there  is  a  significant  degree  of
convergence  between the views of PSA's Corporate  Bond  and
Mortgage- and Asset-Backed Securities membership on many  of
the  issues  raised by the Concept Release, in  several  key
areas  this is not the case, and PSA's different views  (and
the  reasons underlying those different views)  need  to  be
explained.   Second,  and perhaps of  greater  significance,
     mortgage- and asset-backed securities are fundamentally
different  from  corporate debt and equity securities  in  a
number  of  important respects.  As a result,  many  of  the
traditional views underlying the existing federal securities
law  regime regarding the nature of the offering process and
the  information relevant to investors do not apply  equally
to   both  markets.   Any  reform  as  fundamental  as  that
suggested by the ideas contained in the Concept Release must
properly account for basic differences between the different
securities and securities markets that would be impacted  by
such reform.  Accordingly, the second section of this letter
highlights  those areas of the Concept Release  in  which  a
different  regulatory  approach  for  MBS  and  ABS  may  be
warranted.   As  such, this portion of PSA's comment  letter
does  not  attempt  to address comprehensively  all  of  the
issues  implicated  by  the  Concept  Release,  but  instead
focuses  on  issues  that  may  raise  different  regulatory
considerations when applied to the MBS and ABS markets.

                              
                              
                              
                     I.  CORPORATE BONDS

Advisory Committee Report

      Under  the current regulatory system, the U.S. capital
markets  have  become  the  strongest  in  the  world.   The
transparency,  depth  and  liquidity  of  our  markets  have
provided U.S. and foreign issuers access to capital and have
fostered  financial  instrument innovation  unparalleled  in
other markets.  To maintain this leadership in international
capital  markets,  PSA believes that the current  regulatory
system should be modified and amended in accordance with the
suggestions  described below and that  a  more  lengthy  and
exhaustive   study  of  the  ramifications  of   alternative
regulatory  systems, including Company Registration,  should
be undertaken.

      With  respect  to  certain changes  discussed  in  the
Concept  Release,  as  well as certain  aspects  of  Company
Registration, PSA believes that Company Registration  should
be  the  subject of further evaluation and debate.  Although
admirable  as an attempt to address important issues  facing
the  capital markets, the Company Registration concept needs
to  be studied and defined in more detail before the present
system  is  abandoned  in  order  to  receive  the  analysis
necessary to be certain that Company Registration  will  not
have  a  negative impact upon the capital formation  process
and  the  trading markets.  Without this study and analysis,
PSA  questions  whether  Company Registration  will  attract
widespread  issuer participation.  Furthermore,  it  is  our
view   that   Company   Registration   might   be   somewhat
controversial and will require compromises on many important
issues.  In that regard, PSA does not favor the adoption  of
a  voluntary  pilot program.  It is our  view  that  such  a
program  will  create confusion in the bond  marketplace  by
creating  a  dual  regulatory system.  Company  Registration
should  only  be  instituted  after  further  analysis   and
presentation to the marketplace of all applicable rules  and
regulations.

      While  supportive of the goals of Company Registration
postulated  by  the Advisory Committee, including  increased
market  access,  PSA  strongly believes  that  many  of  the
practical  benefits of Company Registration can nevertheless
be  attained  by implementing certain of the  proposals  and
improvements  suggested by the Concept Release  without  the
fundamental  changes  represented by  Company  Registration.
The adoption of a Company Registration system will require a
completely  new  regulatory system that  will  (and  should)
undoubtedly  take  a  significant  amount  of  time  as  the
Commission  seeks to incorporate the differing  views  of  a
number  of constituencies.  PSA is not in favor of  delaying
implementation  of  the more specific and  targeted  changes
discussed  below  while the concept of Company  Registration
and  the rules and regulations instituting such a system are
discussed and debated.  In this regard, we note that, in our
view, certain changes discussed in the Concept Release might
require  legislative  action4; recent experience  has  shown
that  this  can  be  a  lengthy and at  times  unpredictable
process.  Therefore, as discussed in more detail below,  PSA
suggests  that the Commission act promptly to adopt  certain
enhancements  to  the  current  regulatory  system   through
changes  in (i) current rules that are within the  scope  of
the  Commission's  rulemaking or exemptive  power  and  (ii)
Staff  procedures that can be effected without rule changes,
while continuing to study the necessity for more fundamental
changes  such  as Company Registration or other alternatives
that  may  be  suggested by commenters in  response  to  the
Commission's request for comments.

      As  set forth in more detail below, PSA is of the view
that:

                the   quality   of  ongoing  disclosure   in
       registration statements is generally better than  the
       disclosure  in  periodic  reports.   Except  for  the
       adoption  of  mandatory SAS 71 interim  reviews,  PSA
       does  not  believe  that the adoption  of  the  other
disclosure   enhancements  will  have  a   dramatic   impact
       on disclosure in periodic reports;

               investors  should  be  permitted  to  receive
       transaction-specific information  of  the  type  that
       would  be  included in a term sheet through  physical
       or  electronic delivery prior to delivery of a  final
       prospectus;

               any  requirement  to  impose  a  transaction-
       specific  filing  requirement  prior  to  sale  would
       significantly   reduce   the   benefits   of    shelf
       registration;

         additional liberalization of "free writing" without
       adequate controls is neither necessary or desirable;
     
         the confirmation and prospectus delivery requirements
       should be decoupled, thus permitting a confirmation (and, if
       desired by an underwriter, an optional "term sheet") to be
       sent to customers prior to delivery of a final prospectus;

               the  role of underwriters in today's  capital
       markets  should be reassessed and that the  liability
       of  underwriters  should  be  correlated  with  their
       ability to impact the content of prospectuses;

               changes  in  Staff  review  procedures  would
       significantly  improve  the efficiency  of  the  U.S.
       capital  markets, improve the quality of filings  and
       reduce Staff review time;

               the  adoption  of many of the recommendations
       of  the Task Force Report would result in significant
       improvements to the present regulatory system;

               the  expansion  of Rule 144A  to  reduce  the
       investment  security threshold  as  well  as  several
       other  modifications will increase the efficiency  of
       the rule; and

                the  general  solicitation  prohibition   on
       Regulation  D  and  Rule 144A offerings  hampers  the
       utility   of  these  rules,  results  in  unnecessary
       uncertainty and raises costs to issuers.



Securities Act Concepts

      PSA fully appreciates the continuing challenge for the
Commission  to  adapt  the  disclosure  framework   of   the
Securities   Act   of   1933  (the  "Securities   Act")   to
developments and innovation in the primary capital  markets,
while   ensuring  that  investors  receive  full  and   fair
disclosure  in  a  manner  and at a  time  that  allows  for
informed decision-making.  We suggest that equally important
is  the  timely receipt of disclosure by the marketplace  in
order  to  ensure  that  an informed and  orderly  secondary
market  can  be maintained to assure continued  transparency
and liquidity that are so vital to our capital markets.

      Quality  of Ongoing Disclosure.  We believe  that  the
quality  of disclosure in Securities Act offering  documents
is  generally better than the disclosure documents  required
by the Securities Exchange Act of 1934 (the "Exchange Act").
In  addition,  we believe the quality of ongoing  disclosure
under  the Exchange Act differs significantly among issuers.
However,  investment grade debt issuers  and  frequent  non-
investment  grade debt issuers generally provide better  on-
going disclosure in their periodic reports.  It is our  view
that ongoing disclosure documents are generally adequate but
nevertheless could be enhanced.

      PSA  believes  that Securities Act offering  documents
benefit from the attention that the event of capital raising
is  given  by  issuers, which is assisted by  the  objective
focus and involvement of underwriters and their counsel  and
the  issuers' accountants.  However, underwriters and  their
counsel  often  have  little  impact  upon  disclosure  that
already  exists  in Exchange Act disclosure  documents  that
have  been  filed  with the Commission without  their  prior
involvement and review.5

      As  discussed  below, the adoption of  Form  S-3,  the
prominent  use  of  incorporation  by  reference   and   the
evolution of Securities Act offerings since the 1930's  have
transformed  the  traditional role of the  underwriter  with
respect  to Exchange Act disclosure documents.  As a result,
the   quality   of  disclosure  included  in  Exchange   Act
disclosure  documents is not always consistent.  We  believe
that  the quality of such disclosure is highly dependent  on
the  issuer's  internal controls, the extent  to  which  the
issuer  involves  outside lawyers  and  accountants  in  the
preparation process, the significance placed by  the  issuer
on  Exchange  Act disclosure documents and the frequency  of
securities  offerings.   It is not clear  to  PSA  that  the
application  of  additional  liability  provisions  or   the
adoption    of    the   Advisory   Committee's    disclosure
recommendations will dramatically improve the disclosure  in
Exchange  Act  documents.   For  example,  certification  by
senior management or a senior management report submitted to
the audit committee of the board of directors would not,  in
our  opinion, necessarily improve disclosure.  Since certain
senior  members of management are already required  to  sign
periodic  reports,  a  certification  or  senior  management
report   is  not  likely  to  significantly  enhance   these
disclosure  documents.  Also,  while  we  believe   that   a
"disclosure  committee"  of the  board  of  directors  could
improve the accuracy of disclosure, we seriously doubt  that
directors  would  agree to serve on such a committee  unless
they were provided some relief from liability.  On the other
hand, we believe that more timely reports on Form 8-K (i.e.,
accelerating the filing requirement from 15 calendar days to
5  business  days) would improve disclosure.  We also  would
support expansion of current reporting obligations on Form 8-
K  to  include  material  modifications  to  the  rights  of
security holders, resignation or removal of any of  the  top
five  executive  officers, defaults  of  senior  securities,
sales  of  significant  amounts  of  securities  and  events
affecting  audit reports that are currently required  to  be
filed  on Form 10-Q.  We believe that Form 10-K risk  factor
disclosure  may  be  helpful, but in itself  should  not  be
expected to significantly enhance disclosure.

      PSA  also  believes that the quality of disclosure  in
Exchange Act disclosure documents would be enhanced  by  the
participation of independent accountants through the use  of
mandatory SAS 71 interim reviews.  These third-party  review
procedures would not only assist the underwriters  in  their
due  diligence efforts in connection with primary offerings,
but  would  improve  the  quality  of  an  issuer's  interim
financial statements.

      Informing Investors.  PSA believes that at  a  minimum
all  investors  should  be allowed to  receive  physical  or
electronic   delivery  of  transaction-specific  information
("Term Sheets"). 6  While the amount of information that  an
investor  may possess prior to an offering may  vary,  every
investor   has   the   same  need  for  transaction-specific
information.  In fact, given the larger average purchase  by
institutional  investors, they may have a greater  need  for
timely  transaction-specific information.  Such  information
is  also  vital  for the formation of an informed  secondary
market.   We  also  believe that the method  of  information
delivery  or  access should be a matter of  investor  choice
rather  than differing by regulation based on the investor's
level of sophistication.

      On  the other hand, it is our view that there are some
classes  of  investors  who do not  require  the  protection
afforded  by  actual  delivery of  a  prospectus  disclosure
beyond  a  term  sheet.   For  sophisticated  investors   in
offerings  made  by  issuers of investment  grade  debt  and
frequent                     issuers                      of
non-investment   grade  debt7,  constructive   delivery   of
disclosure  other  than  term sheet  information  should  be
sufficient  to  satisfy the requirements of  the  Securities
Act.   As  to general company information relating  to  such
issuers,  we believe that the assumptions of the  "efficient
market hypothesis" are realistic for the debt market and  we
support notions of constructive delivery.

     Finally, we also believe that the Commission should not
impose  special  registration  requirements  for  types   of
securities  never before sold or never before  sold  by  the
issuer.

          Timing   of   Delivery   of   Transaction-Specific
Information.   PSA  is  of  the view  that  details  of  the
securities  being  offered and any  recent  developments  or
changes   with   respect  to  company-specific   information
contained  in prior disclosures should be made available  as
soon  as  possible after pricing.  At least with respect  to
primary  offerings of investment grade debt  securities,  we
believe  that the information needed by an investor to  make
an  informed decision is relatively limited and can be given
orally  or  through the use of a Term Sheet.  Therefore,  we
believe   that  any  requirement  that  transaction-specific
information  be  filed  prior to  sale  would  significantly
reduce  the  flexibility  and  instantaneous  access   shelf
registration  has brought to the U.S. capital markets.   The
imposition  of such a requirement, we believe,  would  place
the  U.S.  capital markets at a significant disadvantage  to
the  European and other global markets which do not have any
such  impediments.   We  believe  that  the  pre-filing   of
transaction-specific information would delay  absorption  of
that information by investors in the primary offering.

       Limitations  on  Written  Communications.   While  we
believe  that  expansion of research and  the  use  of  term
sheets   is  desirable,  it  is  our  view  that  additional
liberalization  of  "free  writing"  outside  the  statutory
prospectus  is not necessary or desirable without adequately
addressing issues relating to liability, indemnification and
discrepancies  among  each of the underwriters'  documents.8
However,  we  do  believe that the current  rules  regarding
research  coverage  of  investment grade  debt  issuers  and
frequent  non-investment grade issuers should  be  clarified
and   expanded.   The  benefits  obtained  from   continuous
research  coverage of most segments of issuers  should  more
than  outweigh  any  regulatory  issues  presented  by  such
coverage.

      As  stated above, we believe that the benefits of  any
requirement  mandating pre-offering filings of  transaction-
specific  Term  Sheets  would be more  than  offset  by  the
burdens  such  a  requirement would place  on  instantaneous
market  access  that  has  become  the  hallmark  of   shelf
registration  in the U.S. capital markets.  We  do  believe,
however, that the Commission should consider authorizing the
optional use of a Term Sheet containing transaction-specific
information  regarding the offering,  which  could  be  made
available  promptly  after pricing, could  be  more  quickly
provided  to  investors  than  the  current  prospectus  and
prospectus supplement requirement and could assist investors
in the secondary market by delivering the Term Sheet to such
investors.  PSA would not favor any requirement to  pre-file
the  Term  Sheet with the Commission as such  a  requirement
would defeat the purpose and intent of the Term Sheet.

     The Term Sheet would summarize the transaction-specific
information  associated with the offering,  incorporate  the
prospectus   or  prospectus  supplement  by  reference   and
disclose  that  the prospectus or prospectus  supplement  is
available  upon request. The contents of such a  term  sheet
would  not and should not be mandated by rule other than  to
require  that the information be derived from and consistent
with the prospectus or prospectus supplement.

      PSA  believes  that  the current  requirement  that  a
prospectus or prospectus supplement accompany or precede the
confirmation  of  the  transaction  should  be  amended   by
decoupling   the   confirmation  and   prospectus   delivery
requirements.  As noted by the Advisory Committee,  delivery
of  the  final  prospectus does not  occur  until  after  an
investor  has  already made his or her investment  decision.
The  reality  of  the  marketplace is such  that  investment
decisions are generally based on the "Subject to Completion"
prospectus  or  prospectus supplement or, more  likely  with
respect  to  issuers of investment grade  debt  or  frequent
issuers  of non-investment grade debt, upon oral information
delivered at or prior to the pricing of the securities.  The
adoption  of  Rule  15c6-1 ("T+3")  has  placed  significant
pressure  on  issuers and underwriters not only  to  perform
their  traditional roles but also to finalize the prospectus
or  prospectus supplement in time to be delivered  with  the
confirmation.  Any further reduction in the settlement cycle
will further exacerbate the timing issue associated with the
confirmation and prospectus delivery requirements.  We  urge
the  Commission  to  consider permitting  broker-dealers  to
incorporate   the  prospectus  into  the  confirmation   and
undertake to deliver such prospectus to anyone who  requests
a  copy.  Accordingly, the confirmation and prospectus would
be  decoupled for prospectus delivery requirements, and  the
confirmation  and any optional term sheet would  not  be  an
illegal  prospectus  if delivered in  the  manner  suggested
herein.



      The  Role  of  "Gatekeepers".  The  capital  formation
process has changed significantly since the enactment of the
Securities  Act.  At that time, investment banks essentially
controlled  access  to  the  capital  markets.    From   the
enactment of the Securities Act until prior to the  adoption
of  the shelf registration process investors relied upon the
"sponsorship"  of  the  investment  bank  for   a   specific
offering,    Moreover,  investment  banks  played   a   more
substantial role in the drafting of the disclosure  included
in  the  prospectus.   Therefore, the  liability  scheme  of
Section  11  of  the Securities Act placed responsibilities,
with a "due diligence" defense, upon underwriters which were
consistent  with their then existing role and their  ability
to  affect  the  disclosure  contained  in  the  prospectus.
Developments since that time have significantly changed  the
role   of   underwriters.   Integrated   disclosure   (where
underwriters are seldom involved in non-transaction specific
disclosure),   significant  developments  in  communications
(where  information about reporting companies  is  available
instantaneously  from numerous sources), shelf  registration
(where issuers can instantaneously effect transactions  with
any  underwriter),  T+3  settlement (where  little  time  is
available  to  deliver  a confirmation  and  prospectus  and
receive     payment),    and    the    globalization     and
institutionalization  of  the  securities   markets   (where
institutions  are  willing to purchase securities  from  any
major   underwriter)  have  made  the  responsibilities   of
underwriters  under  Section  11  inappropriate   and   less
realistic.   "Relationship" investment  banking  has  become
"transactional"   investment  banking,   with   underwriters
providing advice and distribution services; investment grade
debt issuers and frequent non-investment grade issuers have,
in  effect,  become their own "gatekeepers,"  accessing  the
capital  markets at will.  Underwriters have little  control
over the content of the prospectus, which has become a multi-
document  "offering package" consisting  of  documents  that
have  been filed by the issuer at varying times for  varying
purposes  (e.g., periodic reporting and proxy  solicitation)
and  in  the  case  of continuous offerings  is  subject  to
automatic  change whenever the issuer files an Exchange  Act
report.   An  underwriter  today  cannot  realistically   be
expected  to  exercise the same degree of control  over  the
disclosure document that it could at the time the Securities
Act was enacted.

     Except for certain transaction-specific disclosure, the
prospectus  and  periodic reports are, for  all  significant
purposes,  the  documents  of  the  issuer.   Therefore,  we
believe  that the role of an underwriter in today's  capital
markets  should be addressed directly and that the liability
of  an underwriter should be correlated with its ability  to
impact the content of the prospectus.  Unless the Commission
elects  to  exercise its newly granted exemptive authority,9
it would appear that legislative action would be required to
change an underwriter's liability.  Because this could be  a
lengthy  process,  we suggest that if the Commission  agrees
with  our  position,  it  would be appropriate  to  consider
amending Rule 176 to recast the Rule in the form of  a  safe
harbor and to add factors such as:

               The  time  available to the  underwriter  for
       investigation  in connection with a  transaction  and
       the  use  made  by the underwriter of  the  available
       time;

               The  degree to which the procedures  followed
       by  the  underwriter in connection with a transaction
       are consistent with procedures generally followed  by
       underwriters   in   connection  with   offerings   of
       comparable   securities  of  comparable  issuers   in
       comparable transactions;

               The  degree  to which investors rely  upon  a
       rating assigned to the underwritten securities by  an
       independent rating agency; and

                The   degree   to   which   investors   have
       independent   access   to  information   and   credit
       judgments  about the issuer that are of a  comparable
       degree  of  reliability  to those  available  to  the
       underwriter.
       

      Staff Review.  While the Commission considers the full
ramifications  of  the adoption of Company Registration,  we
suggest  it take immediate action to increase the  certainty
of  Staff  review of pre-transaction filings.  PSA  believes
that  increased certainty of Staff review will significantly
improve  the  efficiency of the U.S. capital  markets.   PSA
also  strongly suggests that the Commission make public  the
criteria used by the Staff in determining whether to  review
registration statements.  We do not believe that anything is
gained by withholding this information from the public.   We
favor  enhanced  reviews of Exchange Act  filings,  limiting
reviews  of  transaction  filings to  such  transactions  as
initial  public offerings and "novel and unique" securities.
We also suggest that the Staff permit an issuer to submit  a
transaction to the Staff a short period of time, such as  60
days, in advance of filing.  If a review were indicated, the
issuer  should be able at that time to request a  review  of
its  Exchange Act documents in advance of the filing of  the
registration  statement.  We also  suggest  that  the  Staff
permit  U.S.  issuers to be able to take  advantage  of  the
confidential filing procedures that have been made available
to non-U.S. issuers.

      PSA  also  believes that the Staff should periodically
make  public frequent legal and accounting comments, as well
as  legal interpretations that affect public offerings.   It
should  also  make public its reviews of "novel and  unique"
securities  to  eliminate redundant  Staff  reviews  of  new
financial  instruments.  This would be of great  benefit  to
issuers  and  underwriters, would  improve  the  quality  of
filings and reduce Staff review time.

      We  also suggest that the Staff consider the automatic
effectiveness of pricing amendments or Rule 430A  amendments
that  effect no substantive changes other than the  size  of
the  offering.   This would afford issuers and  underwriters
greater  certainty  in scheduling and  sizing  offerings  in
volatile markets.

Task Force Report Recommendations

       Consistent  with  our  suggestion  above   that   the
Commission focus on improving the current regulatory  system
while  continuing to develop and study Company  Registration
and  other alternative regulatory systems, PSA supports many
of  the  Task  Force Report recommendations.  In particular,
PSA supports the following recommendations:

               Eliminate  restrictions for "at  the  market"
       offerings;

               Permit  companies engaged in shelf  offerings
       to  include  secondary offerings without  identifying
       the  selling security holders until the time  of  the
       actual offering;

               Allow  multiple  undesignated  issuers  on  a
       shelf registration;

               Permit an issuer to reallocate securities, or
       register  a  new  class  of securities,  on  a  shelf
       registration statement by post-effective amendment;

               Allow  seasoned  issuers to pay  registration
       fees  at the time securities are taken down from  the
       shelf;

               Permit seasoned issuers to register a  dollar
       amount  of securities without specifying the  classes
       of securities being registered;

               Eliminate the Form D filing requirement under
       Regulation D;

                Expand  the  safe  harbor  of  Rule  152  as
       recommended by the Task Force Report;

                Permit  the  submission  of  a  registration
       statement  on  a  "quiet" basis  (i.e.,  without  any
       issuer  or  underwriter generated publicity)  without
       being deemed to have commenced a public offering;

               Streamline  and  modernize the  safe  harbors
       provided  for  by Securities Act Rules 137,  138  and
       139  relating  to  the use of broker-dealer  research
       reports;

                Eliminate   a   broker-dealer's   prospectus
       "market-making"  delivery obligations  in  connection
       with  "regular  way"  market making  transactions  in
       securities of its affiliates;

               Permit  a  shelf  registrant  to  qualify  an
       indenture by post-effective amendment rather than  be
       required to file a new registration statement;

               Eliminate  Forms  T-1  and  T-3  and  instead
       require  an  issuer  to  make an  "eligible  trustee"
       representation in the registration statement;

                Broaden  the  circumstances  in  which   the
       guaranteed  convertible securities of a  wholly-owned
       subsidiary  can  be exchanged for securities  of  its
       parent  under  Section 3(a)(9) without  registration;
       and

                Streamline  the  rules  requiring   separate
       audited  financial  statements  of  affiliates  whose
       stock  collateralizes a registrant's  securities  and
       of persons who guarantee a registrant's securities.

Rule 144A

      PSA  supports  the expansion of Rule  144A  under  the
Securities  Act.   Rule 144A has resulted in  a  significant
expansion   of   the   private  institutional   market   for
unregistered  securities, giving issuers a real  alternative
to  the  registered  market without  a  significant  pricing
penalty.   It  has also clarified the resale of unregistered
securities   and  provided  additional  liquidity   to   the
marketplace.   PSA  believes that the success  of  the  Rule
indicates that it should be expanded and revised as follows:

               The  definition  of  qualified  institutional
       buyers ("QIBs") should be modified to (i) reduce  the
       investment security threshold to $25 to 50 million10;
       and  (ii)  allow any investor meeting the  investment
       level   to  be  a  QIB,  even  if  an  individual   _
       experience  has indicated that any investor  of  this
       size  either  possesses or has advisors that  possess
       the  necessary  level  of investment  sophistication.
       These   changes   would  significantly   reduce   the
       necessity  for parallel QIB/Institutional  Accredited
       Investor offerings;

               The  rule  should be available for  sales  to
       QIBs  only; offers, on the other hand, should not  be
       subject to any restriction; and

               The  Rule  should be revised  to  delete  the
       certification  requirement  of  Rule  144A(d)(iv)  as
       unnecessary and burdensome on QIBs who are  inundated
       with   requests   even   when   such   requests   are
       unnecessary  because  of the  public  status  of  the
       purchaser.

     We do not believe that the above expansion of Rule 144A
would  lessen  investor protection in any way  or  harm  the
public interest.  In this regard, we suggest that the  Staff
expand the availability of the registered exchange offer  to
apply  to  all securities sold in reliance upon  Rule  144A.
The  current limitations do not appear to serve  any  useful
function.   We  further  suggest  that  the  Staff  consider
issuing  a "staff legal bulletin" to clarify the application
of  the  integration doctrine to concurrent  and  subsequent
private placements and registered offerings.

      We  also suggest that the Staff expressly sanction the
use  of the Depository Trust Company's book entry system  in
the  case  of  non-PORTAL offerings to non-QIB Institutional
Accredited  Investors.   The  current  situation  has   been
interpreted to require physical delivery of certificates  to
non-QIBs, thereby denying such investors the efficiencies of
the book entry system.

     We request that the Commission specifically exempt Rule
144A  from  the  application  of  Section  11(d)(1)  of  the
Exchange  Act.  We  note that in the Release  adopting  Rule
144A,  the Commission stated that the Staff was prepared  to
provide  interpretive  relief  under  Section  11(d)(1)   in
"appropriate  circumstances."11  We believe,  however,  that
there  is no legal or policy reason for Section 11(d)(1)  to
be  applicable  to  Rule 144A offerings of investment  grade
debt securities as there is no distribution for purposes  of
the  rule.   In  this  context, we would also  suggest  that
separate underwritten takedowns of corporate debt securities
from  a  typical  Rule  415 "shelf"  registration  statement
should be exempt from the prohibitions of Section 11(d)(1).12
Similar to Rule 144A offerings, where the financial terms of
the  securities  are  tailored to the  individual  needs  of
investors and each tranche is "bought" prior to the  pricing
of   the   transaction,  there  is  no   legal   or   policy
justification  for requiring broker-dealers to  wait  thirty
days before they may extend credit on the securities.

General Solicitation

     We believe that the general solicitation prohibition on
offerings made under Regulation D, as well as in the context
of  Rule  144A  discussed  above,  hampers  the  utility  of
Regulation   D   and   Rule   144A,  unnecessarily   creates
uncertainty and raises costs to issuers.  This change by the
Commission would shift the focus to purchasers of securities
rather  than  offerees  and  would  avoid  current  problems
relating  to  the offering of securities such as  publicity,
research  coverage,  publication of quotations  and  similar
"general  solicitation" issues, without, in  our  view,  any
decrease in investor protection.

                         MORTGAGE-BACKED
                 AND ASSET-BACKED SECURITIES

Advisory Committee Report

     As  noted  in the introductory portion of this  letter,
the  basic framework of securities laws and regulations  was
     established substantially before the broad emergence of the
MBS  and  ABS markets.  In a number of areas, this framework
does  not adequately address and accommodate the distinctive
characteristics of MBS and ABS, inhibiting  the  growth  and
efficiency  of these markets.  In both general and  specific
contexts, PSA believes that a rethinking and rationalization
of  the  SEC's  regulation of these  markets  is  needed  to
remove, or at least reduce, these impediments to growth  and
greater efficiency.

      At  the outset, it is important to recognize that  MBS
and   ABS   possess  a  number  of  features  that   readily
distinguish  them from more traditional corporate  debt  and
equity securities.  Principally, these differences relate to
the  importance  of  (1)  the  nature  and  quality  of  the
underlying collateral, and (2) the structure and  timing  of
cash  flows  supported by that collateral,  as  the  primary
determinants  of value of an ABS offering.   These  features
contrast sharply with corporate debt and equity obligations,
where  the  current financial condition and future  earnings
prospects  of  an  issuer_generally,  an  ongoing   business
enterprise  with  active management oversight_are  the  most
important  considerations  and  are  publicly  available  to
investors.

       These  fundamental  differences  between  traditional
corporate  debt and equity securities on the one  hand,  and
MBS  and ABS, on the other, are perhaps nowhere brought more
sharply  into focus than by certain portions of the Advisory
Committee Report, and specifically, by the discussion of the
Company Registration concept.  While PSA's members that  are
active  in  the MBS and ABS markets generally agree  that  a
more  lengthy and exhaustive study of alternative regulatory
systems,   including   Company   Registration,   should   be
undertaken,  the basic relevance and applicability  of  such
systems to MBS and ABS need to be considered.   Although the
eligibility  criteria  for the initial Company  Registration
pilot envisioned by the Advisory Committee would operate  to
exclude issuers of mortgage and asset-backed securities13, as
a  conceptual matter it is difficult to envision the  manner
in  which a "Company Registration" paradigm could be applied
to  such  securities,  where issuers are  usually  distinct,
special    purpose   entities   without   ongoing   business
activities.  Once an MBS or ABS offering has been completed,
the  performance of the related securities  depends  on  the
cash  flows generated by the underlying collateral,  and  in
most  circumstances is entirely unrelated to  the  financial
condition and prospects of the "issuer".  This limited  role
of the issuer renders conventional notions regarding ongoing
financial and other issuer disclosure irrelevant; the nature
of  the  assets  underlying  the MBS/ABS  offering  and  the
structure  of the transaction become, instead, the paramount
considerations for investors.  As a consequence, the Company
Registration  concept  would appear to  require  significant
rethinking  and modification before its application  to  the
MBS  and ABS markets could be considered.  Given the general
inapplicability  of  this concept to  a  large  and  growing
sector  of the fixed income marketplace, PSA would therefore
urge  the  Commission  to consider reforms  outside  of  the
context  of  Company  Registration  that  may  address  more
directly  and effectively the unique needs and circumstances
of the MBS and ABS markets.

Securities Act Concepts

      General.   PSA's Mortgage and Asset-Backed  Securities
membership equally appreciates the continuing challenge  for
the  Commission  to adapt the disclosure  framework  of  the
Securities Act to developments and innovation in the primary
markets, while ensuring that investors receive full and fair
disclosure  in  a  manner  and at a  time  that  allows  for
informed   decision-making.    The   Commission's    pending
initiatives  concerning capital formation present  a  unique
opportunity  to address these challenges in  a  manner  that
adequately accounts for the unique requirements of  MBS  and
ABS.
     
     
     In  the  past  several years, market participants  have
identified and worked with the Staff to resolve a number  of
securities  regulatory issues of particular significance  to
the MBS/ABS markets.  These issues have arisen in connection
with,  among  other  things,  the  desire  to  clarify   the
circumstances  in  which  MBS/ABS research  reports  may  be
circulated    without   resulting  in   prohibited   "market
conditioning"  or  "gun  jumping"  activity;  the   use   of
"computational  materials"  and  related  term   sheets   to
communicate  essential collateral and structural information
to   investors  and  potential  investors  in  MBS  and  ABS
offerings; the distribution of preliminary prospectuses; and
the   treatment  of  re-securitization  transactions,  among
others.

     Although PSA recognizes the substantial efforts by  the
Staff   to   address   such  issues  consistent   with   the
requirements  of the securities laws, the Staff's  positions
on  a  number of these significant regulatory questions  has
not  been wholly adequate to accommodate the legitimate  and
sometimes unique business needs of the MBS/ABS markets.   In
particular, the Staff has imposed a number of conditions and
restrictions  in  connection with  its  no-action  or  other
relief  that  unnecessarily burden issuers and  underwriters
and  otherwise  interfere significantly with  the  efficient
distribution  of securities and information in  the  MBS/ABS
markets.

     In  PSA's  view, many of the unnecessarily  restrictive
and  burdensome  requirements currently imposed  on  MBS/ABS
issuers  and underwriters reflect the difficulty of  fitting
these  securities  into  a  regulatory  framework  that,  as
discussed  above,  was  largely  developed  prior   to   the
existence  of the MBS/ABS markets.  Many of the  traditional
views  underlying the existing federal securities law regime
regarding  the  nature  of  the  offering  process  and  the
information  relevant to investors do  not  apply  in  these
markets.  In particular, the distinctive features of the MBS
and  ABS markets render it essential that asset originators,
underwriters   and   investors  engage   in   an   iterative
structuring  process  that differs  significantly  from  the
process  for  offering most other securities.  In  light  of
these  considerations,  PSA hopes to  use  the  Commission's
pending  initiatives  regarding capital  formation  and  the
securities  offering  process to  work  with  the  Staff  to
identify steps that can be taken to address more effectively
the needs of the MBS/ABS markets.  Our specific comments  in
several key areas are provided below.

     Quality  of  Ongoing Disclosure.  PSA  firmly  believes
that  the  Commission should work to rationalize and  codify
the nature of the ongoing disclosure requirements applicable
to  MBS/ABS  issuers to reflect the differences between  the
categories  of information relevant to MBS/ABS investors  on
an  ongoing  basis  and those relevant  to  other  types  of
securities investor.

      PSA  has  considered  whether the existing  disclosure
system  for MBS/ABS could adequately be improved  simply  by
modifying  the instructions to Forms S-3 and  S-11  and  the
related provisions of Regulation S-K in a manner that  would
eliminate   inapplicable  provisions   and  otherwise   more
appropriately  adapt these forms and rules to the  realities
of  the MBS/ABS market.  PSA's view is that such incremental
modifications  would  be difficult to  implement,  would  be
confusing  to  apply  and  would  not  sufficiently  resolve
existing  problems.  Instead, PSA would urge the  Commission
to  consider  promulgating  a  new  regulation  specifically
designed to create a disclosure system that meets the unique
requirements  of  the MBS/ABS market and better  serves  the
needs   of  MBS/ABS  investors,  issuers  and  underwriters.
Approaching  the matter de novo, with full participation  of
all  market participants, is most likely to achieve a reform
that  will serve the interests of investors, while  enabling
the market to operate in a more efficient fashion.

      Closely  related  to  the disclosure  system  are  the
reporting requirements under the Exchange Act as they  apply
to  MBS/ABS.   In connection with any reform of the  MBS/ABS
disclosure  system,  PSA suggests that the  Commission  also
consider  a  parallel reform of the Exchange  Act  reporting
system  as applied to MBS/ABS.  The inapplicability of  many
of  the requirements of the Exchange Act continous reporting
rules  to  MBS/ABS is evidenced by the fact  that  virtually
every  registrant seeks either an exemptive order or  a  no-
action  letter  to  relieve  it of  inappropriate  reporting
requirements.  This process alone consumes significant  time
of  both  the  Staff and registrants and should be  replaced
with a rule of general applicability.

      A  fundamental  problem  with the  existing  reporting
system  is  demonstrated by the fact that  most  registrants
"deregister"  at  the  earliest  possible  opportunity,  not
because they wish to stop supplying information to investors
but  because  they wish to avoid liability  for  information
over which they have no control.  An issuance of MBS/ABS  by
its  nature is a stand-alone structure.  Once the securities
have  been  sold,  information about the  registrant  (which
often is itself a special purpose entity that exists only to
bring  together  pools  of assets and  securitize  them)  is
immaterial  to investors.  What investors and the  secondary
market need is information about the performance of the pool
of  assets.  This typically is supplied by filing copies  of
the periodic reports that the trustee is required to send to
investors.   These  reports in turn incorporate  information
provided  by  the servicer.  All of the relevant information
is  internal  to  the  pool of assets and  is  generated  by
entities,  such as the trustee and servicer, whose  function
in the transaction is to provide services to the investors.

      The  current  system  does not  adequately  serve  the
interests of participants in the secondary market, who  need
as   much   current  information  as  possible   about   the
performance of the pools of assets underlying MBS/ABS.  This
concern  is  shared broadly by such participants,  including
investors   and  broker/dealers.   Accordingly,  PSA   would
propose  that  the  Commission consider  adopting  rules  to
replace,  for MBS/ABS, the reporting requirements  currently
applied  under the Exchange Act with a requirement (a)  that
all transaction documents require the trustee or servicer to
report  to  investors at least a prescribed minimum  set  of
information  no  less often than or shortly  following  each
payment  date  on  the  securities and  (b)  that  all  such
information provided to investors be made available  by  the
trustee  or  servicer  on request to  any  requester  (which
requirement   could  be  met  by  making  such   information
generally  available  to  the  public,  either  directly  or
through third-party data providers).  Compliance with  these
requirements  should  obviate  the  need  for  filing   such
information under the Exchange Act, although PSA would  urge
that  registrants  (including issuers whose  securities  are
already outstanding) that satisfy these requirements  should
still   be  considered  reporting  companies  for  technical
reasons   (e.g.,  eligibility  to  use  Form  S-3  and   the
availability of Rule 139).
     
     Informing  Investors:  Timing; Limitations  on  Written
Communications.
     
     A.   Term  Sheets.   In many respects,  existing  rules
relating  to  the  offering of MBS/ABS have  the  effect  of
constricting the flow of relevant information to  investors,
especially to the sophisticated institutional investors  who
make up the vast bulk of the market for these securities.  A
number  of  pending problems in this area could be addressed
as part of the Commission's broader consideration of reforms
to  the capital formation process.  Many of these stem  from
general  Section  5  prohibitions  on  the  distribution  of
written non-prospectus communications.

      PSA  believes  that  one  of the  principal  goals  of
regulatory  reform should be enhancement of the  ability  of
asset  originators,  underwriters  and  investors  to   work
together  to  achieve  the  most  efficient  structures  for
MBS/ABS   offerings  without  artificial   and   unnecessary
constraints  under  the  federal  securities  laws  on   the
dissemination  of computational materials, term  sheets  and
other  communications designed to facilitate the structuring
process.   In the MBS/ABS market broker-dealers and  issuers
attempt  to  structure their offerings  to  meet  particular
investor  needs  and constantly changing market  conditions.
MBS/ABS  offerings are typically divided into  a  number  of
separate classes of securities, with cash flows of principal
and  interest in the underlying assets allocated  among  the
classes  according  to specified payment  risks.   Unlike  a
going   concern  that  issues  debt  or  equity,   the   key
characteristics of each MBS/ABS transaction essentially  are
invented in response to investors and the market.

     The  demands  of  the  institutional  investor  market,
coupled  with  the inherent quantitative nature  of  MBS/ABS
collateral   and   structural  information,   require   that
underwriters  of  MBS/ABS  be  able  to  circulate  a  brief
description   of  the  economic  features  of   a   specific
transaction  to  institutional investors  before  the  final
prospectus supplement is distributed.  Consistent  with  the
views previously expressed by PSA's Corporate Bond Division,
we  believe that Commission (even if a more extensive reform
of  the  MBS/ABS regulatory system is not undertaken) should
consider promulgating a rule that makes circulation of  such
a  term  sheet  possible  without violating  the  prospectus
rules, as long as a complete prospectus is delivered to  the
investor in connection with the consummation of any sale.

     B.     Preliminary  Prospectuses.   PSA  believes  that
requirements   governing  the  timing  of  distribution   of
preliminary and final disclosure materials in the context of
MBS/ABS  offerings  should  be revisited  in  light  of  the
practical  limitations  on the ability  of  underwriters  to
prepare  in  a  timely  fashion  materials  that  are   both
responsive  to  investor  needs  and  consistent  with   the
requirements of the federal securities laws.  Preparation of
a  "red herring" preliminary prospectus addressing in detail
all  aspects of a possible transaction is not a feasible  or
desirable   means   in  every  case  to  provide   important
information to investors or to bring securities to market.

     Rule 15c2-8 substantially predates the evolution of the
MBS  and ABS markets in their current form, as well  as  the
current  widespread  availability of the Commission's  shelf
registration  rule.   In  general,  PSA  believes  that  the
application  of  Rule  15c2-8(b) to MBS  and  ABS  offerings
(regardless of whether made pursuant to a shelf registration
statement)  is  not necessary to achieve the  rule's  policy
objectives.   Although such offerings generally  involve  an
issuer  which,  at the time of the offering,  has  not  been
filing  reports  pursuant to Section  13(a)  or  15(d),  the
absence  of  such  reports is merely  a  reflection  of  the
difference  between  the  MBS  and  ABS  markets   and   the
traditional  markets  for debt and  equity  securities,  and
should  not  be  construed to imply that the offering  falls
into  the "new or speculative" category that originally  led
the Commission to adopt the rule.

     Moreover,  the  features of an  MBS  or  ABS  offering,
particularly  its structure, evolve throughout the  offering
process,  often  until shortly before  the  closing  of  the
transaction.    As   a  result,  a  preliminary   prospectus
typically could not provide much of the critical information
that  is  expected by investors and, indeed,  even  a  final
prospectus,  reflecting structural and  other  changes  that
occur up until the moment of pricing, must be prepared under
considerable time constraints.  Investors have sought other,
more timely and effective means of obtaining the information
they  regard as essential in arriving at informed investment
decisions, such as through the distribution of computational
materials.   As described above, PSA believes  that  similar
benefits  would accrue from a liberalization of the  use  of
other  forms  of written communication in the  MBS  and  ABS
markets,   including  term  sheets  and   other  structuring
information.  In light of these considerations, PSA believes
that   the   Commission  should   codify  through   specific
rulemaking  the  basic  policy  set  forth  in  the  Staff's
existing  no-action position concerning the  application  of
Rule 15c2-8(b) to MBS and ABS14; namely, that no preliminary
     prospectus need be delivered at least 48 hours prior to the
sending of a confirmation, as long as a final prospectus  is
sent or given to a purchaser prior to or at the same time  a
confirmation is sent.

     C.   Computational  Materials.  PSA believes  that  the
market  and the interests of all participants would best  be
served  by  adoption  of a rule that  replaced  the  current
burdensome   and   untargeted  system  of   filing   certain
computational  materials and term sheets by  a  system  that
greatly   liberalizes  the  ability  to  send  to  potential
investors  a wide range of information without a requirement
that  it  be filed, so long as the prospectus (or prospectus
supplement)  includes  indicative materials  covering,  with
respect  to  the  final  structure of the  transaction,  the
topics  and  types  of data addressed in  those  preliminary
materials.  If only on the basis of practicality  and  cost,
the  formal  disclosure  document can  not  and  should  not
include  every  item sent to every potential investor  about
every possible structure.  Ready distribution of term sheets
and  other  information would respond most directly  to  the
expressed need of potential investors to obtain an early and
meaningful  understanding  of  proposed  transactions.   The
market  can  do  a  better job of informing  investors  (and
getting reactions from investors to possible structures)  on
a  timely  basis  without  the  procedural  burdens  of  the
existing system - and the formal offering documents  can  be
better focused on providing useful information.

      D.   Information  Relating to  Underlying  Assets.   A
particular  problem  under  the  current  disclosure  system
arises  in  connection with certain MBS/ABS transactions  in
which  some (but not necessarily all) investors seek  access
to voluminous information about the underlying assets.  This
is  particularly characteristic of securitized offerings  of
commercial  mortgage  loans,  in  which  some  institutional
investors,  even  though the securities are  being  publicly
offered,  wish  to  perform their own due diligence  on  the
underlying  loans  and  real  properties  as  if  they  were
purchasing  an  interest  in  those  assets  directly.  Such
investors  often  seek  access to third-party  documentation
held  by  the  issuer and underwriters, such as  appraisals,
environmental  reports,  property  managers'   reports   and
engineering reports.  Existing law makes unclear the ability
of  issuers  and underwriters to furnish such  materials  or
their liability for doing so.  It would seem appropriate, if
individual  investors  wish  to have  access  to  underlying
information   that  the  issuer  has  not  deemed   requires
disclosure  in the prospectus (or has covered by summarizing
in  the prospectus), for such investors to have that option,
so long as any prospective investor is given the same access
upon  request.  However, there should be no requirement  for
the  issuer  to  include such material in the prospectus  or
file it with the Commission, or for either the issuer or the
underwriters  to be required to assume liability  under  the
Securities Act.

      E.   Electronic  Access  to  Transaction  Information.
Another issue under current rules is the desire of investors
to  have electronic access to information about the pools of
assets  underlying  a  proposed  issue  of  MBS/ABS  at  the
earliest  possible moment.  For example, both investors  and
underwriters  would like underwriters to  be  able  to  post
information about the characteristics of underlying pools on
electronic bulletin boards, such as Bloomberg, no later than
when the prospectus is delivered to the underwriters, or  in
some  cases even earlier.  This information is contained  in
the  prospectus  (and currently is also  furnished  by  some
issuers  to investors in an electronic medium together  with
the  prospectus).  It is generally not practicable  to  post
the  entire  prospectus  on such  a  bulletin  board  or  to
establish  a hyper-text link to another site containing  the
prospectus.  The  current rules should be reformed  to  make
clear  that  such  a  posting is  permissible,  as  long  as
investors can obtain the entire prospectus upon request.  It
would  also be desirable to make it possible for issuers  to
post  on  the same bulletin boards the computer models  they
have used to produce information in the prospectus, such  as
the effect of various interest rate and prepayment scenarios
on  yields.   This  would  make it  easier  for  prospective
investors  to  model  other scenarios that  better  fit  the
investor's own assumptions or needs.

      F.   Research Reports.  The state of the law currently
is  unclear as to the ability of broker-dealers to  rely  on
current   Rule   139  as  the  basis  for   permitting   the
distribution  of  research  reports  and  similar  published
information concerning MBS and ABS offerings.  As a  result,
broker-dealers  face significant practical and  interpretive
uncertainties in attempting to distinguish normal or routine
MBS and ABS research publications from those which might  be
deemed  to  condition the market for an  upcoming  offering.
Analogous  to  its  views on Rule 15c2-8(b),  PSA  does  not
believe that the absence of an Exchange Act reporting status
for MBS and ABS issuers_a circumstance that relates more  to
the  structure  of MBS/ABS offerings than  it  does  to  any
inherent    speculative   quality    of    the    securities
involved_should  prevent  the market  from  benefiting  from
widespread  research coverage of both new and  seasoned  MBS
and ABS issues, and in particular those that qualify for  an
investment-grade rating.  PSA believes that  the  Commission
should use the opportunity of more general regulatory reform
to   establish  a  framework  for  distribution  of  MBS/ABS
research   materials  that  is  consistent   with   concerns
identified  by  PSA in the context of existing  rules,  with
particular  emphasis on eliminating formalistic prohibitions
that   limit  the  ability  of  underwriters  to  distribute
accurate materials while engaging in their ordinary, ongoing
business  activities  involving the structuring  of  MBS/ABS
offerings.

     G.  Resecuritizations.   The state of the law currently
is  similarly  unclear as to the ability  of  an  issuer  of
MBS/ABS to include, as part of a pool of collateral,  assets
that  are  indirectly held through a securitization  vehicle
that  has  been  the subject of a private  placement  or  an
earlier  public offering.  A variety of views  expressed  by
members of the Staff to different issuers at different times
has left market participants in a state of uncertainty.  Any
reform  of the existing rules should address this issue  and
should eliminate artificial distinctions between securitized
and   unsecuritized  assets.   As  long  as  there  is  full
disclosure  in the prospectus of relevant information  about
the  assets  underlying an issue of MBS/ABS  (including  any
material   disclosure   about   the   effects   that   prior
securitization  may have on servicing, cash flows  or  other
relevant  matters), there seems no reason to raise obstacles
to including assets that have already been securitized or to
require   registration  or  reregistration  of  the  earlier
transaction in which such assets were securitized.
                      III.  CONCLUSION

      PSA  appreciates this opportunity to provide its views
to  the Commission.  If it would be helpful to the Staff and
the  Commission, we would be most willing to make PSA  staff
and  member firm personnel available to meet and discuss any
of  the  points raised in this letter.  Please  address  any
questions  or requests for additional information to  Joseph
W.  Sack, George P. Miller or Sarah M. Starkweather of  PSA,
at 212-440-9400.

     Very truly yours,




     Stanley J. Becchetti                    Thomas K. Guba
      Chairman, PSA Corporate Bond Division   Chairman,  PSA
Mortgage and Asset-Backed
     (Vice President, A.G. Edwards & Sons, Inc)   Securities
Division
                                      (Managing    Director,
Donaldson, Lufkin &
                                      Jenrette    Securities
Corporation)





     Arthur D. Hyde                Lawrence E. Thomas
     Vice Chairman, PSA Corporate Bond       Vice Chairman ,
PSA Mortgage and
      Division                       Asset-Backed Securities
Division
        (Managing    Director,   Salomon   Brothers    Inc.)
(Manager/General Partner, Edward Jones)







cc:  The  Honorable Arthur Levitt, Chairman, Securities  and
     Exchange Commission
     The Honorable Steven M. H. Wallman, Commissioner
     The Honorable Norman S. Johnson, Commissioner
     The Honorable Isaac Hunt, Jr., Commissioner
     Brian   J.  Lane,  Director,  Division  of  Corporation
     Finance
     David  A.  Sirignano, Associate Director,  Division  of
     Corporation Finance
     Anita  Klein,  Office  of Chief  Counsel,  Division  of
     Corporation Finance



_______________________________
1  PSA  represents  approximately 250 securities  firms  and
banks that underwrite, trade and sell debt securities,  both
domestically   and  internationally.   PSA's  member   firms
include  underwriters  which  participate  in  approximately
ninety  to  ninety-five percent of the initial  distribution
and  secondary market trading of corporate debt  securities,
including   investment   grade  and   non-investment   grade
corporate  debt  securities as well as  mortgage  and  other
asset-backed  securities.   More information  about  PSA  is
available on PSA's Internet home page at http://www.psa.com.
2  In  order  to  gain a better and more  detailed  view  of
members'  reactions to the Concept Release  and  the  issues
raised,  PSA  distributed a Questionnaire to 56  PSA  member
firms  represented on the Corporate Bond Division Executive,
Investment  Grade  Debt,  High Yield  Debt  and  Fixed  Rate
Capital  Securities  Committees.   Comments  in  the   first
section   of   this  letter  are  based  upon  Questionnaire
responses  received  from a segment of these  member  firms,
representing  a  broad  spectrum  of  participants  in   the
traditional corporate debt markets, as well as the input  of
a  special Task Force established to respond to the  Concept
Release.   The  Questionnaire enabled PSA  member  firms  to
focus  on the essential issues raised by the Concept Release
and,  thereby,  formulate what PSA believes  are  innovative
opportunities  to  change salient elements  of  the  current
regulatory framework under the Securities Act of 1933.
3 PSA letter dated November 5, 1996 to Brian Lane, Director,
SEC  Division of Corporation Finance, regarding response  to
Staff request for suggestions concerning possible reforms of
disclosure  and  reporting rules for  mortgage-  and  asset-
backed securities.
4 While the Commission may have been granted broad exemptive
power by the National Securities Markets Improvements Act of
1996,  certain of the changes that might result from Company
Registration   may  not  fall  within  this  new   exemptive
authority.    For  example,  it  is  unclear   whether   the
Commission could eviscerate the private placement  exemption
provided  by  Section 4(2) of the Securities  Act  with  the
adoption of rules implementing Company Registration.
5  Underwriters, however, are much more likely  to  have  an
impact  upon Exchange Act disclosure relating to (i)  events
not  previously  addressed  in  Exchange  Act  filings,  but
required in the registration statement, (ii) elaboration  of
prior disclosure and (iii) certain extraordinary situations.

6  See  PSA's  comment letter, dated October  16,  1996,  in
response  to  the  Commission's  release  regarding  Use  of
Electronic  Media  by  Broker-Dealers, Transfer  Agents  and
Investment Advisors for Delivery of Information (Release No.
33-7288).
7  For this purpose, PSA would consider a frequent issuer to
be  one  that accesses the markets at least twice a year  or
maintains an active medium-term note program.

8   In  this  regard, PSA recognizes that the Staff  of  the
Commission   has   granted   no-action   advice   permitting
underwriters of mortgage-backed and asset-backed  securities
to   distribute   written   "computational   materials"   to
prospective investors prior to the availability of  a  final
prospectus  (see  Kidder, Peabody Acceptance  Corporation  I
(May  20,  1994) and Public Securities Association (May  27,
1994)).  Section II of this letter, reflecting the views  of
PSA's Mortgage and Asset-Backed Securities Division, in fact
advocates an expansion of the circumstances in which written
non-prospectus communications may be circulated.  It is  our
view,  however,  that  the unique and  largely  quantitative
characteristics  of  mortgage and  asset-backed  securities,
described  at greater length in Section II, may  be  readily
distinguished  from investment grade debt and non-investment
grade debt.
9  As  discussed above, we note that the National Securities
Markets  Improvements  Act of 1996  granted  the  Commission
broad  and  general  exemptive  authority  under  both   the
Securities  Act  and  the Exchange Act to  conditionally  or
unconditionally exempt any person, security or  transaction,
or  any  class  of  the  same, from  any  provision  of  the
Securities  Act or Exchange Act (except Section 15C  of  the
Exchange Act) or any rule or regulation thereunder.
10 We note that the National Securities Markets Improvements
Act  of 1996, adding the definition of "qualified purchaser"
to  the  Investment  Company Act of  1940,  used  investment
thresholds of $5 million for natural persons and $25 million
for other persons.
11 See Resale of Restricted Securities; Changes to Method of
Determining  Holding Period of Restricted  Securities  under
Rules 144 and 145 (Release No. 33-6862 (April 23, 1990)).
12 See Kidder, Peabody & Co., SEC No-Action Letter [1990-1991
Transfer  Binder] Fed. Sec. L. Rep. (CCH) 79,626  (Aug.  16,
1990)  where  the  Staff  reversed  a  prior  position   and
permitted a broker-dealer acting as agent for an issuer in a
medium-term  note program to extend credit  on  notes  of  a
particular tranche after the expiration of thirty days, even
if  sales  of  other medium-term notes by the  broker-dealer
continued.
13  Under these criteria, issuers would be required to: have
registered at least one public offering under the Securities
Act;  have  been reporting under the Exchange  Act  for  two
years; have a public float of at least $75 million; and have
securities  listed  on  the  New York  Stock  Exchange,  the
American Stock Exchange or NASDAQ NMS.  See footnote  11  of
the Concept Release.
14 See Public Securities Association, SEC No-Action Letter on
Asset  Backed  Securities, File No. TP 95-450 (December  15,
1995).    PSA  notes  that  certain  technical  issues   and
limitations on the scope of this no-action relief would need
to be addressed in any rulemaking initiative.

-------------------------------------------------------------------------------------------
                                            Attachment
                
                PSA's CORPORATE BOND DIVISION

                     EXECUTIVE COMMITTEE
                              
Stanley J. Becchetti, Chairman  
A.G. Edwards & Sons, Inc.       Bart McDade
                                Lehman Brothers Inc.
Arthur D. Hyde, Vice Chairman   
Salomon Brothers Inc            Kent B. Monypeny
                                Morgan Keegan & Company, Inc.
James J. Baldino                
BA Securities                   Richard W. Morton
                                First Chicago Capital Markets Inc.
Thomas E. Bernard               
Lehman Brothers Inc.            
                                
Steven Bowman                   Vincent Murray
Smith Barney Inc.               ABN AMRO Securities (USA) Inc.
                                
Robert F. Campbell              Sal Naro
First Albany Corporation        Bear, Stearns & Co. Inc.
                                
Louis S. Caro, Jr.              Barry Nordstrand
The Industrial Bank of Japan    Piper Jaffray Inc.
                                
Nelson D. Civello               Timothy O'Neill
Dain Bosworth Incorporated      Bear, Stearns & Co. Inc.
                                
Thomas S. Dillon                Randall C. Outlaw
Daiwa Securities America Inc.   J.P. Morgan Securities Inc.
                                
Michael Evelyn                  Steven C. Rattner
Deutsche Morgan Grenfell        Donaldson, Lufkin & Jenrette
                                Securities Corporation
                                
Alan M. Green                   Steve Renehan
McFadden Farrell & Smith, L.P.  Merrill Lynch & Co., Inc.
                                
Raleigh Hortenstine III         Lewis A. Sachs
Nations Securities              Bear, Stearns & Co. Inc.
                                
Christopher T. Huff             J. Hamilton Scherer, Jr.
EVEREN Securities, Inc.         Wheat First Butcher Singer
                                
William H. James                Philip W. Seefried, Jr.
Lazard Freres & Co. LLC         CS First Boston
                                
Ronald G. Keenan                Joseph P. Shea
Chase Securities, Inc.          Cantor Fitzgerald Securities
                                
Gregory F. Kiernan              Michael Shea
PaineWebber Incorporated        J.C. Bradford & Co.
                                
Ferdinand Masucci               James P. Sickling
Morgan Stanley & Co. IncorporatedRaymond James & Associates, Inc.

James F. Smith
Freeman Securities Company, Inc.

Salvatore J. Trani
Garban Corporates Inc.

Michael Walsh
Chapdelaine Corporate Securities Inc.

I. Ladd Weinberg
Asiel & Co.

Jon Winkelreid
Goldman, Sachs & Co.

Stephen W. Yarbrough
Interstate/Johnson Lane Corporation