The Securities and Exchange Commission (SEC) on Wednesday issued a proposed rule to enhance disclosure to investors in the asset-backed securities (ABS) market, and adopted an interim rule that required certain swaps dealers and other parties to report any security-based swaps entered into prior to the July 21 passage of the Dodd-Frank Act.
The proposed rules regarding the ABS market, the SEC says, require issuers of asset-backed securities to perform a review of the assets underlying the securities and publicly disclose information relating to the review. The SEC proposal also requires an issuer or underwriter of ABS to make publicly available the findings and conclusions of any third-party due diligence report.
“This marks the third Commission proposal to address the ABS issues that came to light during the financial crisis,” said SEC Chairman Mary Schapiro, during her opening remarks at the open meeting on Wednesday. “This proposal will require issuers to provide investors with better information about the loans backing the asset-backed securities.”