In December 2004, the SEC adopted its first comprehensive body of regulations relating to asset-backed securities (ABS), referred to as "Regulation AB." The regulations covered four major areas — registration, disclosure, communication practices, and periodic reporting - and took effect on January 1, 2006.
In December 2005 and August 2006, the SEC staff issued interpretations of various provisions of Regulation AB and related rules. This series of interpretations can be found in the staff's Regulation AB Compliance and Disclosure Interpretations.
In August 2014, the SEC adopted final rules under Regulation AB that substantially revise the offering process, disclosure and reporting requirements for offerings of ABS. More than four years after the SEC originally published its comprehensive "Regulation AB II" rule proposals, and after two partial re-proposals in 2011 and 2014, the final rules implement several key areas of reform but defer action on other significant aspects of the original proposals.
Key reforms adopted in August 2014 include:
- Asset-Level Information: Requires issuers to provide standardized loan-level information for ABS backed by residential mortgages, commercial mortgages, auto loans, auto leases, debt securities and resecuritizations in the prospectus and in ongoing reports.
- Investor Review Period: Requires issuers using a shelf registration statement to file a preliminary prospectus containing transaction-specific information at least 3 business days in advance of the first sale of securities in the offering.
- Shelf Eligibility: Replaces the prior investment grade requirement for ABS shelf eligibility with new transaction requirements, including a requirement that the chief executive officer of the depositor provide a certification at the time of each takedown regarding disclosure contained in the prospectus and the structure of the transaction.
- Filing of Transaction Documents: Accelerates the date by which transaction agreements must be filed in connection with shelf takedowns. Final transaction agreements must be filed no later than the date the final prospectus is required to be filed.
The SEC has adopted provisions for a 12-month transition period for all new rules, except those relating to asset-level disclosure, and a 24-month transition period for new rules relating to asset-level disclosure. In each case, the transition period begins to run from the effective date for the new rules, which is 60 days after publication in the Federal Register.
The SEC deferred action on several significant aspects of its earlier Regulation AB II rule proposals, including:
- Imposing public-style disclosure requirements on private placements and resales of structured finance products;
- Making asset-level requirements applicable to all asset classes and asset-specific requirements for equipment loans and leases, student loans, and floorplan financings;
- Requiring grouped-account disclosure for credit and charge card ABS; and
- Further accelerating the date by which transaction agreements, in substantially final form, must be filed — requiring that they be filed by the date the preliminary prospectus is required to be filed.
It is unclear whether or when the SEC will take action on these aspects of the rule proposals.
- SEC Final Rule: Adopting Release for Regulation AB II - August 27, 2014
- SEC Final Rule: Adopting Release for Regulation AB I - January 7, 2005
- Extension of Comment Period for Asset-Backed Securities Release (Reg AB II) - March 28, 2014
- Re-Opening of Comment Period for Asset-Backed Securities Release (Reg AB II) - February 25, 2014
- Re-Proposed Amendments to Regulation AB (Reg AB II Re-Proposal) - August 5, 2011
- Proposed Amendments to Regulation AB (Original Regulation AB II Proposal) - May 3, 2010
- Proposing Release for Regulation AB I - May 3, 2004
SEC Staff Guidance:
- SEC Manual Of Publicly Available Telephone Interpretations (Regulation AB)
- SEC No-Action Letter to Ford Motor Credit Company LLC
- August 2017