SEC Adopts Rules to Regulate Asset-Backed Securities

Washington, DC, January 17, 2005 - The SEC has adopted new rules to address the registration, disclosure, and reporting requirements for asset-backed securities (ABS).

Background
In May 2004, the SEC proposed new ABS rules in response to significant growth in the ABS market.

The new rules:

• provide tailored disclosure guidance and requirements for filings involving ABS;
• update and clarify the registration requirements for ABS offerings;
• streamline and codify existing interpretive positions that permit the use of written communications in a registered offering of ABS in addition to the statutory registration statement prospectus; and
• consolidate and codify existing interpretive positions that allow modified Exchange Act reporting that is more tailored and relevant to ABS.

All ABS offerings commencing after December 31, 2005 must comply with the new rules.

The SEC is also seeking comment on the appropriate treatment of certain structured securities that do not meet the standard definition of “asset-backed security.”

ICI Position
The Institute filed a comment letter that strongly supported the proposed rules governing ABS in July 2004. ICI noted that, because mutual funds are purchasers of ABS and devote substantial time and resources to analyzing offerings of these securities, ICI has significant interest in the registration, disclosure, and reporting requirements for ABS and in ensuring that these requirements provide timely information to investors while continuing to further innovations in the ABS market.