Asset-level securities are those securities backed by a tangible asset, such as home mortgages and car loans. Form ABS-EE is the form that issuers of asset-backed securities (ABS) use to file exhibits. This is comprised of EX-102 (Asset Data File) and EX-103 (Asset Related Document). Offerings of asset-backed securities backed by residential mortgages, commercial mortgages, auto loans, auto leases, and debt securities (including resecuritizations) must comply with asset-level disclosure requirements no later than November 23, 2016.

Numerous concerns about the ABS market prompted the SEC to alter the requirements in an effort to promote greater visibility, better stability, and more investor protection in the ABS market after the financial crisis. The final rules are intended to provide investors with timely and sufficient information while reducing the likelihood of undue reliance on credit ratings and providing mechanisms to help to enforce the representations and warranties made about the assets underlying securities.

The SEC has adopted the following significant disclosure revisions, among other changes:

1. New requirements for certain asset classes to disclose standardized asset-level information, including data about the payment stream related to a particular asset, data that allow for analysis of the collateral related to a particular asset, data related to the performance of the asset over time, and data pertaining to the loss mitigation efforts made by the issuer.
2. Revisions to the shelf offering process, eligibility criteria, and prospectus delivery requirements, which removes reliance on credit ratings and helps create oversight. This allows investors to properly examine the assets underlying a prospectus.
3. Changes to Asset-Backed Issuer Distribution Report on Form 10-D, the Annual Report on Form 10-K, and the Current Report on Form 8-K.

In addition to these broad revisions, the SEC has adopted clarifying, technical, and other changes to the current rules. Some of these changes address and improve areas that have the potential to raise issues similar to those highlighted in the financial crisis. Also, some of the rules respond to Sections 939A and 942(b) of the Dodd-Frank
Act.

Most of these changes have already been in effect. The requirements for asset-level disclosures become effective on November 23, 2016. For more information on these final rules, see the SEC’s Asset-Backed Securities Disclosure
and Registration Adopting Release and Schedule AL (Item 1125 of Regulation AB). For information concerning the XML codes pertaining to the new rules, see the EDGAR ABS XML Technical Specification. Given the potential size of ABS filings, the SEC encourages registrants to test file Form ABS-EE to the EDGAR System and to file as early in the day as possible.

Sources

Reg AB II Asset-level Requirements Compliance Date on November 23, 2016 (www.sec.gov)

Notice to Form ABS-EE Filers: Testing of Large Form ABS-EE Submissions (www.sec.gov) 

SEC Release No. 33-9638 - Asset-Backed Securities Disclosure and Registration