Until recently, there appeared to be a market consensus that legacy ABS issued before November 23, 2016 (the compliance date for Regulation AB II’s asset-level data requirements) would not have to include asset-level data in Forms 10-D filed after that compliance date. However, some statements from the SEC staff that were recently and widely repeated among market participants appeared to support a contrary view, at least as a preliminary conclusion. From the perspective of issuers, servicers, trustees, and administrators, having to include asset-level data in periodic reporting for legacy ABS issued before the compliance date could pose several problems. Among other things, their systems may not have been set up to capture all of the required information, and it could be difficult to amend the transaction documents to require capturing and reporting that information.
The Regulation AB II transition rules state the following:
- Registrants must comply with new rules, forms, and disclosures other than the asset-level data requirements no later than November 23, 2015.
- “Offerings” of ABS backed by the relevant asset classes must comply with the asset-level data requirements no later than November 23, 2016.
- Forms 10-D and 10-K filed after November 23, 2015 must comply with new rules and disclosures, except for asset-level data.
The implication is that only offerings that occur on or after November 23, 2016 need to comply with the asset-level data requirements. This view is consistent with most of the commentary in the adopting release, which says that any registered offering of ABS commending with an initial bona fide offer on November 23, 2015 “and the ABS that are the subject of that offering” must comply with the new rules and forms, except for asset-level data.
However, in the context of explaining the length of the transition period, the commentary also says that “[i]ssuers will be required to provide asset-level information no later than [November 23, 2016].” The specific reference here is not limited to “offerings,” which in the absence of the other context in the rules and the release could be read to imply that reporting ABS deals issued before November 23, 2016 have to begin including asset-level data in their periodic reports.
As of last week, this controversy appeared well on its way to resolution. Multiple reports indicate that the SEC staff has reconsidered its earlier approach and now has a preliminary view that legacy deals will not have to include asset-level data in their periodic reports—or perhaps even that the staff’s original position may have been misinterpreted. We will report the SEC staff’s final views as soon as they are communicated.