In this report, we assess an advance proposal from the SEC that would restructure the criteria ABS issuers must meet to remain exempt from the Investment Company Act. The current protocol is ratings reliant – of course, to be no more under Dodd-Frank’s demand for an end to express regulatory reliance on NRSROs. Although the provisions related to the Investment Company Act are now just boilerplate in ABS prospectuses, changes to them will have far-reaching implications for MBS, as we detail in this analysis.
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