SEC Approves New Rules Regulating Asset-Backed Securities
The Securities and Exchange Commission today voted to adopt two sets of new rules designed to help revitalize the asset-backed securities (ABS) market by encouraging better disclosure for investors.
One set of rules that requires issuers of asset-backed securities to disclose the history of the requests they received and repurchases they made related to their outstanding asset-backed securities. The second set of rules requires issuers of asset-backed securities to conduct a review of the assets underlying those securities, and to disclose to investors the nature, findings and conclusions of the issuer's review of the assets.
In a press release today, SEC Chairman Mary L. Schapiro is quoted as stating:
"At one time, the securitization market provided trillions of dollars of liquidity to virtually every sector of the economy. However, during the financial crisis, ABS investors suffered significant losses, causing the market for securitization to rapidly decline. These rational measures are designed to help revitalize the important asset-backed securities market by encouraging better disclosure for investors."
Will these rules bring stability to the ABS market? Will investors and issuers react favorably? What do you think?
