The SEC has finalized asset-level and shelf-registration requirements for ABS comprised of mortgage, auto, and debt assets and their resecuritizations. Filing deadlines will now be three days prior to issuance, giving investors more time to review them. Overall shelf-registration standards for ABS have also been revised to, among other things, delete current credit-rating-agency eligibility standards and require CEO certification of disclosure integrity. Aimed at reversing the opacity and rating-reliance that characterized ABS prior to the financial crisis, the SEC rules create a transformed framework in which investors will have far more information on registered, non-agency offerings. This is particularly true with regard to new investor rights related to shelf-registered ABS in sectors such as mortgages, where the SEC rules are designed to limit the risks investors believed they absorbed when mortgages underlying ABS were modified or even foreclosed upon. However, the scope of the disclosures and new shelf-registration standards could encourage greater issuances through private placements, perhaps limiting capital-market capacity to replace the GSEs in the mortgage sector or absorb the large amounts of ABS some believe necessary to restore credit availability in sectors like lending to small-and-medium size businesses.
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