SEC Seeks Feedback on Expanding Access to RMBS Markets
The SEC requested comment on concept proposals for expanding issuer and investor access to the registered asset-backed securities markets ("RMBS").
In the concept release, the agency asked for feedback on whether (i) "to amend the asset-level disclosure requirements for [RMBS] under Item 1125 of Regulation AB," and (ii) to revise the definition of "asset-backed security" and related definitions under Item 1101 ("Definitions") of Regulation AB.
The SEC said it seeks to address (i) the absence of a registered private-label RMBS market since the adoption of Regulation AB, highlighting the shift to Rule 144A ("Private resales of securities to institutions") transactions or Agency-sponsored deals; (ii) the need to increase capital formation and liquidity by reducing regulatory impediments and lowering borrowing costs; and (iii) the evolution of the ABS market, including how best to balance investor needs with privacy protections. The SEC noted that Regulation AB’s narrower definitions exclude structures, such as series trusts and CLOs, that are recognized as ABS under the Exchange Act.
The SEC asked whether targeted adjustments could revive the registered RMBS market by broadening investor participation, improving liquidity and transparency, and lowering financing costs. The agency asked for data backed proposals that reduce friction while maintaining the core disclosure framework of Regulation AB and investor protections.
Comments are due within 60 days following publication of the comment request in the Federal Register.
On issuance of the concept release:
Chair Paul S. Atkins said the fact that more than $100 billion in RMBS are issued annually under Rule 144A, but no public offerings have occurred since 2013, suggested that Regulation AB II’s disclosure rules may be deterring issuers. He supported reevaluating the balance between transparency and privacy, including issuer-sponsored websites for sensitive data, and favored aligning Regulation AB’s ABS definition with the broader Exchange Act standard.
Commissioner Caroline A. Crenshaw suggested that disclosure burdens alone do not explain the lack of registered RMBS, pointing instead to investor caution, market preferences, and the appeal of Agency securities. She questioned whether reopening these issues is the best use of Commission resources and urged commenters to emphasize transparency and integrity over deregulation.
Commissioner Hester M. Peirce recommended recalibrating RMBS disclosures to better balance transparency and borrower privacy and pointed to inconsistencies between Regulation AB’s narrow ABS definition and the broader Exchange Act standard.
Commissioner Mark T. Uyeda argued that the current regime is unworkable, with burdensome requirements driving issuance to Rule 144A. He welcomed reconsideration of asset-level disclosure and ABS definitions to improve transparency while lowering costs, enhance liquidity, and expand access to homeownership.