Rules regarding asset-backed securities recently proposed by the Securities and Exchange Commission in the United States, could come to rule Canadian ABS issuers, too, says Bay Street law firm Torys LLP.

In a new bulletin, Torys notes that the SEC’s proposed rules are the first set of comprehensive rules specifically targeting ABS issuers, setting out their ongoing disclosure obligations and reporting requirements. The SEC’s intent, Torys says, is to codify existing practices and make them more transparent to the market.

Torys notes that there is no persuasive regime for the Canadian ABS regulatory regime to differ from the US regime, so it concludes that Canadian regulators will harmonize their requirements with those settled on by the SEC.

It says that any distributions that will be carried out in the U.S. using Canadian property will have to conform with the SEC’s final rules. As a result, it suggests that Canadian ABS market players follow the U.S. proceedings.