The U.S. Securities and Exchange Commission is proposing rule changes that would overhaul the regulation of asset-backed securities (ABS), which were central to financial crisis.

The changes proposed Wednesday would:

• establish new criteria for shelf eligibility;

• revise filing deadlines for ABS offerings to provide investors with more time to consider transaction-specific information; and

• require that prospectuses for public offerings of ABS contain specified asset-level information about each of the assets in the pool.

“The proposed rules are intended to better protect investors in the securitization market by giving them more detailed information about pooled assets, more time to make their investment decisions, and the benefits of better alignment of the interests of issuers and investors through a retention or “skin in the game” requirement. Finally, the rules would bring greater transparency to the private market as well,” said SEC chairman, Mary Schapiro.


In response to the proposals, Shelia Bair, chairman of the FDIC, said, “I applaud today’s vote by the SEC to propose new standards under the securities laws for the securitization market. These proposals include essential elements of reform that emphasize transparency, loan quality, risk retention and investor due-diligence, which will help provide appropriate economic incentives to foster a sustainable securitization market.”

The Securities Industry and Financial Markets Association was cautiously supportive too, saying that, in principle, it supports efforts to increase the transparency and “reasonable” risk retention requirements. “We look forward to working with the SEC to refine the risk retention provisions and other aspects of this proposal. In addition, SIFMA echoes the statements of certain commissioners at the meeting urging coordination among regulators and policymakers to ensure consistency among standards,” said SIFMA president and CEO, Tim Ryan, adding, “We will review the proposed regulations in detail with our members when they are published and will provide more comprehensive comments at that time.”

IE