The panel has directed its staff to work on an "exposure draft" for the amendment to FAS 140, the accounting rule that allows companies to move their assets off balance sheet by selling them to securitization vehicles. Most conduits would not be affected by the proposed measure, which, among other things, would severely restrict the sources of liquidity for the few CP vehicles that function as "qualified special-purpose entities."

The draft is expected to be released by early next month, and market players will likely have until July 31 to respond to it.

Under FASB's proposal, a company selling receivables to such a conduit would no longer be permitted to provide liquidity for the assets. Plus, no single entity could account for more than half of any vehicle's liquidity support. Such facilities temporarily cover CP payments to investors in the event of a market disruption.

For the most part, qualified SPEs are used by issuers of term securities to keep the underlying assets off their balance sheets. But as FASB has amended the rules to accommodate new types of transactions, it has created small loopholes that some conduit operators have used to their advantage. Although the board's latest move isn't intended to stop conduits from becoming qualified SPEs altogether, market players say the proposed rules would certainly make it more difficult to do so.

FAS 140 places strict limits on the activities of such vehicles to ensure that the sellers truly give up all claims and responsibilities for the collateral.

Conduits usually don't rank as qualified SPEs for a number of reasons -- most notably because the vehicles are actively managed. Plus, companies often retain limited interests in the assets they sell to conduits or support them through liquidity facilities and guarantees.

The amendment is separate from FASB's Interpretation No. 46, which takes effect next month. That set of rules could force many conduit sponsors and issuers of collateralized debt obligations to consolidate the underlying assets on their books.