U.S. Securities and Exchange Commission opens concept release on RMBS disclosures and potential barriers to the registered ABS market

The U.S. Securities and Exchange Commission has published a concept release seeking public comment on whether regulatory impediments are limiting issuer and investor access to the registered asset-backed securities (ABS) market and whether the current registration and reporting framework is meeting the needs of today’s ABS market. The release highlights potential frictions including the burden of asset-level disclosure requirements for residential mortgage-backed securities (RMBS), constraints around providing sensitive asset-level data, and whether the ABS definition for registration purposes is too narrow. In a statement accompanying the release, Commissioner Caroline A. Crenshaw urged commenters to scrutinize the premise that the registered RMBS market is “artificially depressed” due to regulation, noting that there have been no registered private-label RMBS offerings since June 2013 and that the Commission’s asset-level disclosure rules were adopted in 2014 under a Dodd-Frank statutory mandate. She pointed to alternative explanations for low registered issuance, including post-crisis investor risk perceptions, ratings and servicing concerns, and preferences for Agency RMBS, and questioned the resource case given a similar 2019 request for comment that drew nine letters. The statement also cautioned against removing disclosure requirements that support transparency and investor diligence, and encouraged investors to explain what information is most necessary for evaluating these products.