
[Federal Register Volume 76, Number 151 (Friday, August 5, 2011)]
[Proposed Rules]
[Pages 47948-47984]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19300]



[[Page 47947]]

Vol. 76

Friday,

No. 151

August 5, 2011

Part V





Securities and Exchange Commission





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17 CFR Parts 229, 230, 239, et al.





Re-Proposal of Shelf Eligibility Conditions for Asset-Backed 
Securities; Proposed Rule

  Federal Register / Vol. 76, No. 151 / Friday, August 5, 2011 / 
Proposed Rules  

[[Page 47948]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 229, 230, 239 and 249

[Release Nos. 33-9244; 34-64968; File No. S7-08-10]
RIN 3235-AK37


Re-Proposal of Shelf Eligibility Conditions for Asset-Backed 
Securities

AGENCY: Securities and Exchange Commission.

ACTION: Re-proposed rule.

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SUMMARY: We are revising and re-proposing certain rules that were 
initially proposed in April 2010 related to asset-backed securities in 
light of the provisions added by the Dodd-Frank Wall Street Reform and 
Consumer Protection Act and comments received on our April 2010 
proposals. Specifically, we are re-proposing registrant and transaction 
requirements related to shelf registration of asset-backed securities 
and changes to exhibit filing deadlines. In addition, we are requesting 
additional comment on our proposal to require asset-level information 
about the pool assets. We continue to consider the other matters in our 
April 2010 proposing release.

DATES: Comments should be received on or before October 4, 2011.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml);
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-08-10 on the subject line; or
     Use the Federal Rulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number S7-08-10. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments 
are also available for Web site viewing and copying in the Commission's 
Public Reference Room, 100 F Street, NE., Washington, DC 20549, on 
official business days between the hours of 10 a.m. and 3 p.m. All 
comments received will be posted without change; we do not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Rolaine Bancroft, Senior Special 
Counsel, Robert Errett, Special Counsel, or Jay Knight, Special 
Counsel, in the Office of Structured Finance, at (202) 551-3850, 
Division of Corporation Finance, U.S. Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-3628.

SUPPLEMENTARY INFORMATION: We are proposing amendments to Item 601\1\ 
of Regulation S-K; \2\ Items 1100, 1101, 1109, 1119, and 1121 \3\ of 
Regulation AB \4\ (a subpart of Regulation S-K); Rules 401 and 415,\5\ 
under the Securities Act of 1933 (``Securities Act''); \6\ and Form 10-
D \7\ under the Securities Exchange Act of 1934 (``Exchange Act'').\8\ 
We also are proposing to add Form SF-3 \9\ under the Securities Act.
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    \1\ 17 CFR 229.601.
    \2\ 17 CFR 229.10 et al.
    \3\ 17 CFR 229.1100, 17 CFR 229.1101, 17 CFR 229.1109, 17 CFR 
229.1119, 17 CFR 229.1121.
    \4\ 17 CFR 229.1100 through 17 CFR 229.1123.
    \5\ 17 CFR 230.401 and 17 CFR 230.415.
    \6\ 15 U.S.C. 77a et seq.
    \7\ 17 CFR 249.312.
    \8\ 15 U.S.C. 78a et seq.
    \9\ 17 CFR 239.45.
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Table of Contents

I. Background
II. Securities Act Shelf Registration
    A. Proposed Form SF-3
    B. Shelf Eligibility for Delayed Offerings
    1. Revised and Re-Proposed Transaction Requirements
    (a) Certification
    (b) Credit Risk Manager and Repurchase Request Dispute 
Resolution Provisions
    (c) Investor Communication
    2. Revised and Re-Proposed Registrant Requirements
    3. Annual Evaluation of Form SF-3 Eligibility in Lieu of Section 
10(a)(3) Update
    (a) Annual Compliance Check related to Timely Exchange Act 
Reporting
    (b) Annual Compliance Check Related to the Fulfillment of the 
Transaction Requirements in Previous ABS Offerings
    4. General Requests for Comment on Shelf Eligibility
III. Disclosure Requirements
    A. Exhibits To Be Filed With Rule 424(h) Filing
    B. Requests for Comment on Asset-Level Information
    1. Section 7(c) of the Securities Act
    2. Additional Requests for Comment on Asset-Level Data
    3. Additional Requests for Comment on When to Require Schedule L
    4. Additional Requests for Comment on Privately-Issued 
Structured Finance Products
    C. Waterfall Computer Program
IV. Transition Period
V. General Request for Comment
VI. Paperwork Reduction Act
    A. Background
    B. Revisions to PRA Reporting and Cost Burden Estimates
    1. Form S-3 and Form SF-3
    2. Form 10-D
    3. Regulation S-K
    4. Summary of Proposed Changes to Annual Burden Compliance in 
Collection of Information
    5. Solicitation of Comments
VII. Economic Analysis
    A. Background
    B. ABS Shelf Eligibility Proposals
    1. Benefits
    2. Costs
    C. Disclosure Requirements
    1. Benefits
    2. Costs
    D. Requests for Comment
VIII. Small Business Regulatory Enforcement Fairness Act
IX. Regulatory Flexibility Act Certification
X. Statutory Authority and Text of Proposed Rule and Form Amendments

I. Background

    In April 2010, we proposed rules that would revise the disclosure, 
reporting and offering process for asset-backed securities 
(``ABS'').\10\ In light of the problems exposed by the financial 
crisis, we had proposed significant revisions to our rules governing 
offers, sales and reporting with respect to asset-backed securities. 
These 2010 ABS Proposals were designed to improve investor protection 
and promote more efficient asset-backed markets.
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    \10\ See Asset-Backed Securities, SEC Release No. 33-9117 (April 
7, 2010) [75 FR 23328] (the ``2010 ABS Proposing Release'' or the 
``2010 ABS Proposals'').
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    Among other things, in the 2010 ABS Proposing Release we proposed 
eligibility requirements to replace the current credit rating 
references in shelf eligibility criteria for asset-backed security 
issuers. We also proposed to require that, with some exceptions, 
prospectuses for public offerings of asset-backed securities and 
ongoing Exchange Act reports contain specified asset-level information 
about each of the assets in the pool in a standardized tagged data 
format. Our proposal also included disclosure requirements as 
conditions to exemptions from offering registration. Further, we 
proposed to require asset-backed issuers to provide investors with more 
time to consider

[[Page 47949]]

transaction-specific information about the pool assets.
    The Dodd-Frank Wall Street Reform and Consumer Protection Act (the 
``Act'') was enacted in July 2010.\11\ The April 2010 ABS proposals 
sought to address a number of concerns about the ABS offering process 
and ABS disclosures that were subsequently addressed in the Act, while 
others were not referenced in the Act. Specifically, two of the 
proposed requirements--risk retention \12\ and continued Exchange Act 
reporting \13\--will be required for most registered ABS offerings as a 
result of changes mandated by provisions of the Act. We are re-
proposing some of the 2010 ABS Proposals at this time in light of the 
changes made by the Act and comments we received.
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    \11\ Public Law 111-203, 124 Stat. 1376 (July 21, 2010).
    \12\ In the 2010 ABS Proposing Release, we proposed to require 
sponsors of ABS transactions retain a specified amount of each 
tranche of the securitization, net of hedging. Section 941 of the 
Act added new Section 15G of the Exchange Act. Section 15G generally 
requires the Federal Reserve Board, the Federal Deposit Insurance 
Corporation, the Office of the Comptroller of the Currency, the 
Commission and in the case of the securitization of any 
``residential mortgage asset,'' together with the Department of 
Housing and Urban Development and the Federal Housing Finance 
Agency, to jointly prescribe regulations relating to risk retention. 
In March 2011, the agencies proposed rules to implement Section 15G 
of the Exchange Act. See Credit Risk Retention, SEC Release No. 34-
64148 (March 30, 2011) [76 FR 24090] (the ``Risk Retention Proposing 
Release'' or ``Risk Retention Proposals'').
    \13\ The Commission proposed in the 2010 ABS Proposals to 
require that an ABS issuer undertake to file Exchange Act reports 
with the Commission on an ongoing basis as a condition to shelf 
eligibility. The 2010 ABS Proposals also proposed to require an 
issuer to confirm, among other things, whether Exchange Act reports 
required pursuant to the undertaking were current as of the end of 
the quarter in order to be eligible to use the effective 
registration statement for takedowns. Section 942(a) of the Act 
eliminated the automatic suspension of the duty to file under 
Section 15(d) of the Exchange Act for ABS issuers, and granted 
authority to the Commission to issue rules providing for the 
suspension or termination of such duty. Due to the amendment to 
Section 15(d), the proposed shelf eligibility requirement to 
undertake to file Exchange Act reports is no longer necessary, 
including the quarterly evaluation by issuers of compliance with the 
undertaking. In January 2011, we proposed rules to provide for 
suspension of the reporting obligations for asset-backed securities 
issuers when there are no asset-backed securities of the class sold 
in a registered transaction held by non-affiliates of the depositor. 
See Suspension of the Duty to File Reports for Classes of Asset-
Backed Securities Under Section 15(d) of the Securities Exchange Act 
of 1934, Release No. 34-63652 (Jan. 6, 2011) [76 FR 2049].
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    Our re-proposals for ABS shelf registration eligibility are also 
part of several rule revisions we are considering in connection with 
Section 939A of the Act. Section 939A of the Act requires that we 
``review any regulation issued by [us] that requires the use of an 
assessment of the credit-worthiness of a security or money market 
instrument and any references to or requirements in such regulations 
regarding credit ratings.'' Once we have completed that review, the 
statute provides that we modify any regulations identified in our 
review to ``remove any reference to or requirement of reliance on 
credit ratings and to substitute in such regulations such standard of 
credit-worthiness'' as we determine to be appropriate. In that 
connection, we take into account the context and purposes of the 
affected rules.
    Our re-proposals today for shelf eligibility would require:
     A certification filed at the time of each offering off of 
a shelf registration statement, or takedown, by the chief executive 
officer of the depositor or executive officer in charge of 
securitization of the depositor concerning the disclosure contained in 
the prospectus and the design of the securitization.
     Provisions in the underlying transaction agreements 
requiring the appointment of a credit risk manager to review assets 
upon the occurrence of certain trigger events and provisions requiring 
repurchase request dispute resolution;
     A provision in an underlying transaction agreement to 
include in ongoing distribution reports on Form 10-D a request by an 
investor to communicate with other investors; and
     An annual evaluation of compliance with the registrant 
requirements.
    We are also re-proposing revised filing deadlines for exhibits in 
shelf offerings to require that the underlying transaction agreements, 
in substantially final form, be filed and made part of a registration 
statement by the date the preliminary prospectus is required to be 
filed under the 2010 ABS Proposal.\14\
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    \14\ See discussion regarding proposed Rules 424(h) and 430D 
below in Section II.
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    We are requesting additional comment on our 2010 ABS Proposals 
relating to asset-level data in light of Section 942(b) of the Act and 
comments we received on the 2010 ABS Proposals. Section 942(b) of the 
Act adds Section 7(c) of the Securities Act to require the Commission 
to adopt regulations requiring an issuer of an asset-backed security to 
disclose, for each tranche or class of security, certain loan level 
information regarding the assets backing that security.\15\ Lastly, we 
are requesting additional comment on our 2010 ABS Proposals relating to 
privately-offered structured finance products.
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    \15\ See Section 7(c) of the Securities Act.
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II. Securities Act Shelf Registration

    Securities Act shelf registration provides important timing and 
flexibility benefits to issuers. An issuer with an effective shelf 
registration statement can conduct delayed offerings ``off the shelf'' 
under Securities Act Rule 415 without staff action.\16\ Under our 
current rules, asset-backed securities may be registered on a Form S-3 
registration statement and later offered ``off the shelf'' if, in 
addition to meeting other specified criteria,\17\ the securities

[[Page 47950]]

are rated investment grade by a nationally recognized statistical 
rating organization (NRSRO). As we explained in the 2010 ABS Proposing 
Release, we recognize that asset-backed issuers have expressed the need 
to use shelf registration to access the capital markets quickly.\18\ 
Our re-proposed shelf eligibility requirements are designed to help 
ensure a certain quality and character for asset-backed securities that 
are eligible for delayed shelf registrations given the speed of these 
offerings. We discuss our proposed revisions to the registrant and 
transaction requirements for shelf eligibility below.\19\
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    \16\ As discussed in the 2010 ABS Proposing Release, 
contemporaneous with the enactment of Secondary Mortgage Market 
Enhancement Act of 1984 (SMMEA), which added the definition of 
``mortgage related security'' to the Exchange Act, we amended 
Securities Act Rule 415 to permit mortgage related securities to be 
offered on a delayed basis, regardless of which form is utilized for 
registration of the offering (Public Law 98-440, 98 Stat. 1689). 
SMMEA was enacted by Congress to increase the flow of funds to the 
housing market by removing regulatory impediments to the creation 
and sale of private mortgage-backed securities. An early version of 
the legislation contained a provision that specifically would have 
required the Commission to create a permanent procedure for shelf 
registration of mortgage related securities. The provision was 
removed from the final version of the legislation, however, as a 
result of the Commission's decision to adopt Rule 415, implementing 
a shelf registration procedure for mortgage related securities. See 
H.R. Rep. No. 994, 98th Cong., 2d Sess. 14, reprinted in 1984 U.S. 
Code Cong. & Admin. News 2827; see also Shelf Registration, Release 
No. 33-6499 (Nov. 17, 1983) [48 FR 52889], at n. 30 (noting that 
mortgage related securities were the subject of pending 
legislation). In 1992, in order to facilitate registered offerings 
of asset-backed securities and eliminate differences in treatment 
under our registration rules between mortgage related asset-backed 
securities (which could be registered on a delayed basis) and other 
asset-backed securities of comparable character and quality (which 
could not), we expanded the ability to use ``shelf offerings'' to 
other asset-backed securities. See Simplification of Registration 
Procedures for Primary Securities Offerings, Release No. 33- 6964 
(Oct. 22, 1992) [57 FR 32461]. Under the 1992 amendments, offerings 
of asset-backed securities rated investment grade by an NRSRO 
(typically one of the four highest categories) could be shelf 
eligible and registered on Form S-3. The eligibility requirement's 
definition of ``investment grade'' was largely based on the 
definition in the existing eligibility requirement for non-
convertible corporate debt securities.
    \17\ In addition to investment grade rated securities, an ABS 
offering is eligible for Form S-3 registration only if the following 
conditions are met: (i) Delinquent assets must not constitute 20% or 
more, as measured by dollar volume, of the asset pool as of the 
measurement date; and (ii) with respect to securities that are 
backed by leases other than motor vehicle leases, the portion of the 
securitized pool balance attributable to the residual value of the 
physical property underlying the leases, as determined in accordance 
with the transaction agreements for the securities, does not 
constitute 20% or more, as measured by dollar volume, of the 
securitized pool balance as of the measurement date. See General 
Instruction I.B.5 of Form S-3. Moreover, to the extent the depositor 
or any issuing entity previously established, directly or 
indirectly, by the depositor or any affiliate of the depositor are 
or were at any time during the twelve calendar months and any 
portion of a month immediately preceding the filing of the 
registration statement on Form S-3 subject to the requirements of 
Section 12 or 15(d) of the Exchange Act (15 U.S.C. 78l or 78o(d)) 
with respect to a class of asset-backed securities involving the 
same asset class, such depositor and each such issuing entity must 
have filed all material required to be filed regarding such asset-
backed securities pursuant to Section 13, 14 or 15(d) of the 
Exchange Act (15 U.S.C. 78m, 78n or 78o(d)) for such period (or such 
shorter period that each such entity was required to file such 
materials). Such material (except for certain enumerated items) must 
have been filed in a timely manner. See General Instruction I.A.4 of 
Form S-3. We are not proposing changes to these other eligibility 
conditions.
    \18\ According to EDGAR, in 2006 and 2007, only three ABS 
issuers filed registration statements on Form S-1 that went 
effective. See the 2010 ABS Proposing Release at 23334.
    \19\ In addition to the removal of references to ratings from 
the shelf eligibility requirements, we note that our 2010 ABS 
Proposing Release included proposals to increase the amount of time 
that investors are required to be provided to review information 
regarding a particular shelf takedown and, therefore, promote 
analysis of asset-backed securities in lieu of undue reliance on 
security ratings for shelf offerings. New Rule 424(h), as proposed 
in the 2010 Proposing Release, would require an ABS issuer using a 
shelf registration statement on proposed Form SF-3 to file a 
preliminary prospectus containing transaction-specific information 
at least five business days in advance of the first sale of 
securities in the offering. Proposed new Rule 430D would require the 
framework for shelf registration of ABS offerings and related Rule 
424(h) filing requirements for a preliminary prospectus. Under 
proposed Rule 430D, the Rule 424(h) preliminary prospectus must 
contain substantially all the information for the specific ABS 
takedown previously omitted from the prospectus filed as part of an 
effective registration statement, except for pricing information. 
These proposals remain outstanding. See the 2010 ABS Proposing 
Release at 23335.
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A. Proposed Form SF-3

    In the 2010 ABS Proposing Release, given the distinctions between 
ABS offerings and other registered securities offerings, we proposed to 
add new registration forms that would be used for any sale of a 
security that meets the definition of an asset-backed security,\20\ as 
defined in Item 1101 of Regulation AB.\21\ The proposed new forms, 
which would be named Form SF-1 and Form SF-3,\22\ would require 
disclosure in accordance with all the items applicable to ABS offerings 
that are currently required in Form S-1 and Form S-3 as modified by the 
2010 ABS Proposals. Offerings that qualify for delayed shelf 
registration \23\ would be registered on proposed Form SF-3, and all 
other ABS offerings would be registered on Form SF-1.\24\
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    \20\ See the ABS 2010 ABS Proposing Release at 23337.
    \21\ 17 CFR 229.1101(c).
    \22\ The proposed forms would be referenced in 17 CFR 239.44 and 
17 CFR 239.45.
    \23\ In this release, we also refer to such offerings on current 
Form S-3 and proposed Form SF-3 as ``shelf offerings.'' Note that in 
the 2010 ABS Proposing Release, we proposed to limit the 
registration of continuous ABS offerings to ``all or none'' 
offerings on Form SF-3. That proposal remains unchanged and 
outstanding. See the 2010 ABS Proposing Release at 23350.
    \24\ We are not re-proposing any part of Form SF-1 today. 
Therefore, our 2010 ABS Proposal for Form SF-1 remains outstanding.
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    With respect to proposed Form SF-3, we are only re-proposing 
certain registrant and transaction requirements contained in the 
instructions to the Form. The other parts of proposed Form SF-3, which 
include, among other things, disclosure requirements and instructions 
for signatures, remain unchanged and outstanding.\25\
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    \25\ The proposed text of the entire Form SF-3 is included in 
Section XI of this release, as proposed in the 2010 ABS Proposing 
Release and revised for the registrant and transaction requirements 
that we are re-proposing today.
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B. Shelf Eligibility for Delayed Offerings

    Under the 2010 ABS Proposals, ABS issuers would no longer establish 
shelf eligibility through an investment grade credit rating.\26\ The 
proposals were part of our broad ongoing effort to remove references to 
NRSRO credit ratings from our rules in order to reduce the risk of 
undue ratings reliance and eliminate the appearance of an imprimatur 
that such references may create.\27\ In place of credit ratings, we had 
proposed to establish four shelf eligibility criteria that would apply 
to mortgage-related securities and other asset-backed securities alike:
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    \26\ See the 2010 ABS Proposing Release at 23338.
    \27\ See the Security Ratings Release.
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     A certification filed at the time of each offering off of 
a shelf registration statement, or takedown, by the chief executive 
officer of the depositor that the assets in the pool have 
characteristics that provide a reasonable basis to believe that they 
will produce, taking into account internal credit enhancements, cash 
flows to service any payments on the securities as described in the 
prospectus;
     Retention by the sponsor of a specified amount of each 
tranche of the securitization,\28\ net of the sponsor's hedging (also 
known as ``risk retention'' or ``skin-in-the-game'');
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    \28\ We use the term ``sponsor'' to mean the person who 
organizes and initiates an asset-backed securities transaction by 
selling or transferring assets, either directly or indirectly, 
including through an affiliate, to the issuing entity. See Item 
1101(l) of Regulation AB.
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     A provision in the pooling and servicing agreement that 
requires the party obligated to repurchase the assets for breach of 
representations and warranties to periodically furnish an opinion of an 
independent third party regarding whether the obligated party acted 
consistently with the terms of the pooling and servicing agreement with 
respect to any loans that the trustee put back to the obligated party 
for violation of representations and warranties and which were not 
repurchased; and
     An undertaking by the issuer to file Exchange Act reports 
so long as non-affiliates of the depositor hold any securities that 
were sold in registered transactions backed by the same pool of 
assets.\29\
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    \29\ See the 2010 ABS Proposing Release at 23338-23348.
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    Similar to the existing requirement that the securities must be 
investment grade, the 2010 ABS Proposals for registrant and transaction 
requirements were designed to provide that asset-backed securities that 
are eligible for delayed shelf-registrations have certain quality and 
character.
    Our re-proposal for registrant and transaction requirements for 
shelf does not contain a requirement for risk retention because, as 
noted above in Section I, the Risk Retention Proposals are currently 
being considered by the joint regulators.\30\ The Risk Retention 
Proposals would apply to both registered and non-registered ABS. 
Although we may consider whether additional risk retention requirements 
for shelf eligibility are appropriate after the risk retention rules 
are adopted by the joint regulators, at this point we believe that it 
would be preferable not to have different risk retention requirements 
for our shelf eligibility rules. We had proposed that the sponsor of 
any securitization retain risk in each tranche of the securitization as 
a partial replacement for the investment grade ratings requirement 
because we believe that securitizations with sponsors that have 
continuing risk exposure would likely be higher quality than those 
without, and we anticipate that the final risk retention rules adopted 
by the joint regulators should also promote that goal. In addition, we 
believe disparate risk retention requirements could be

[[Page 47951]]

confusing and impose unnecessary burdens on the ABS markets. 
Consequently, we are eliminating the risk retention requirement from 
our proposal at this time.
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    \30\ See fn. 12.
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    Further, our re-proposal for registrant and transaction 
requirements for shelf does not contain a requirement to include an 
undertaking to provide Exchange Act reports because, as noted above in 
Section I, Section 942(a) of the Act eliminated the automatic 
suspension of the duty to file under Section 15(d) of the Exchange Act 
for ABS issuers and granted the Commission the authority to issue rules 
providing for the suspension or termination of such duty.\31\ As a 
result, ABS issuers with Exchange Act Section 15(d) reporting 
obligations will continue to report without regard to the shelf 
eligibility requirements.
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    \31\ See fn. 13.
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    As noted above, our re-proposals are limited to certain registrant 
and transaction requirements contained in the instructions to the Form. 
The other parts of proposed Form SF-3, such as disclosure and 
instructions for signatures, remain unchanged and outstanding. We 
believe that the re-proposed transaction requirements described below 
would allow ABS issuers to access the market quickly, while providing 
improved investor protections that would be indicative of a higher 
quality security, making them appropriate replacements for the 
investment grade rating condition to eligibility for a delayed shelf 
offering.
1. Revised and Re-Proposed Transaction Requirements
    We are revising and re-proposing certain transaction requirements 
for shelf to replace the current investment grade rating criterion. As 
noted above, in light of the Act, our re-proposal does not include a 
risk retention requirement or a requirement that the issuer undertake 
to continue Exchange Act reporting. As explained in further detail 
below, under the re-proposal, the proposed transaction requirements for 
shelf offerings would include:
     A certification filed at the time of each offering off of 
a shelf registration statement, or takedown, by the chief executive 
officer of the depositor or executive officer in charge of 
securitization of the depositor concerning the disclosure contained in 
the prospectus and the design of the securitization;
     Provisions in the underlying transaction agreements 
requiring the appointment of a credit risk manager to review the 
underlying assets upon the occurrence of certain trigger events and 
provisions requiring repurchase request dispute resolution; and
     A provision in an underlying transaction agreement to 
include in ongoing distribution reports on Form 10-D a request by an 
investor to communicate with other investors.
    In the 2010 ABS Proposing Release, we did not propose to change the 
other current ABS shelf offering transaction requirements related to 
the amount of delinquent assets in the asset pool and residual values 
of leases and we are not proposing to change these requirements in this 
release.\32\
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    \32\ See fn. 17.
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(a) Certification

    We are re-proposing the transaction requirement, which partially 
replaces the investment grade ratings criterion for shelf eligibility, 
for ABS shelf offerings to require that a certification be provided by 
either the chief executive officer of the depositor or the executive 
officer in charge of securitization of the depositor. In the 2010 ABS 
Proposing Release, we proposed that the depositor's chief executive 
officer certify that to his or her knowledge, the assets have 
characteristics that provide a reasonable basis to believe they will 
produce, taking into account internal credit enhancements,\33\ cash 
flows at times and in amounts necessary to service payments on the 
securities as described in the prospectus.\34\
    This officer would also certify that he or she has reviewed the 
prospectus and the necessary documents for this certification.\35\ We 
believe, as we did when we proposed the certification for Exchange Act 
periodic reports, that a certification may cause these officials to 
review more carefully the disclosure, and in this case, the 
transaction, and to participate more extensively in the oversight of 
the transaction, which is intended to result in shelf eligible ABS 
being of a higher quality than ABS structured without such 
oversight.\36\ In response to the 2010 ABS Proposing Release, the 
investor members of one commentator agreed and emphasized that the 
certification would be a valuable and appropriate requirement for shelf 
eligibility, encouraging more careful issuer review of 
securitizations.\37\ Other commentators, however, expressed concern 
regarding the certification and suggested that the certification 
instead just relate to disclosure.\38\
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    \33\ We note internal credit enhancement would include 
guarantees applicable to the underlying loans. See letter from 
Sallie Mae on the 2010 ABS Proposing Release (requesting that the 
Commission clarify that internal credit enhancement should include 
all guarantees applicable to government guaranteed student loans). 
The public comments we received are available on our Web site at 
http://www.sec.gov/comments/s7-08-10/s70810.shtml.
    \34\ As we explained in the 2010 ABS Proposing Release, this 
condition is similar to the current disclosure requirements for 
asset-backed issuers in the European Union. Annex VIII, Disclosure 
Requirements for the Asset-Backed Securities Additional Building 
Block, Section 2.1 (European Commission Regulation (EC) No. 809/2004 
(April 29, 2004). The EU requires asset-backed issuers to disclose 
in each prospectus that the securitized assets backing the issue 
have characteristics that demonstrate capacity to produce funds to 
service any payments due and payable on the securities. Similarly, 
under the North American Securities Administrator's Association 
(NASAA)'s guidelines for registration of asset-backed securities, 
sponsors are required to demonstrate that for securities without an 
investment grade rating, based on eligibility criteria or 
specifically identified assets, the eligible assets being pooled 
will generate sufficient cash flow to make all scheduled payments on 
the asset-backed securities after taking certain allowed expenses 
into consideration. The guidelines are available at http://www.nasaa.org. In the 2010 ABS Proposing Release, we explained that 
because the certification is framed as an ABS shelf eligibility 
condition instead of a disclosure requirement, we proposed slightly 
different language than a similar EU disclosure requirement in order 
to more precisely outline what the officer is certifying to. We 
proposed a certification rather than a disclosure requirement 
because we believe the potential focus on the transaction and the 
disclosure that may result from an individual providing a 
certification should lead to enhanced quality of the securitization.
    \35\ As we noted in the 2010 ABS Proposing Release, a 
depositor's chief executive officer may conclude that in order to 
provide the certification, he or she must analyze a structural 
review of the securitization. Rating agencies also typically conduct 
a structural review of the securitization when issuing a rating on 
the securities.
    \36\ See Certification of Disclosure in Companies' Quarterly and 
Annual Reports, Release No. 34- 46079 June 14, 2002. See also 
Testimony Concerning Implementation of the Sarbanes-Oxley Act of 
2002 by William H. Donaldson, Chairman U.S. Securities and Exchange 
Commission Before the Senate Committee on Banking, Housing and Urban 
Affairs (September 9, 2003) (noting that a consequence of ``the 
combination of the certification requirements and the requirement to 
establish and maintain disclosure controls and procedures has been 
to focus appropriate increased senior executive attention on 
disclosure responsibilities and has had a very significant impact to 
date in improving financial reporting and other disclosure'').
    \37\ See letter from Securities Industry Financial Markets 
Association (SIFMA) (investors) on the 2010 ABS Proposing Release.
    \38\ Several commentators offered, as an alternative, that the 
CEO of the depositor certify to the adequacy and accuracy of the 
disclosure in the offering documents. See letters from American Bar 
Assosciation (ABA); American Bankers Association and ABA Securities 
Association (ABASA); American Securitization Forum (ASF); Australian 
Securitisation Forum (AusSF); Bank of America (BOA); CNH Capital 
America (CNH); Financial Services Roundtable (FSR); J.P. Morgan 
Chase & Co. (JP Morgan); Mortgage Bankers Association (MBA); SIFMA 
(dealers and sponsors); Sallie Mae; and Wells Fargo on the 2010 ABS 
Proposing Release.
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    Although integrally related to the disclosure about the structure, 
assets and securities, we preliminarily believe the certification 
should not be limited to

[[Page 47952]]

disclosure. An asset-backed security is the product of multiple and 
varied contracts. The certification is designed to encourage better 
oversight by an executive officer of the securitization process. The 
certification also is proposed as a partial substitute for the 
investment grade rating. As such, we believe it is appropriate to 
require that the depositor have some belief that the securities being 
offered and sold pursuant to a shelf registration are of a certain 
quality. The proposed certification is not a condition for selling or 
registering asset-backed securities and, in fact, as is the case today, 
securities that are part of the same transaction may be privately 
offered and sold and thus would not be subject to the certification. 
For these reasons, we are not limiting the proposed certification to 
disclosure as suggested by some commentators. However, we agree that 
having the certification address disclosure more directly may also 
improve the oversight and therefore the quality of the securities. 
Consequently, we are proposing to revise the certification to 
explicitly address disclosure matters, as described below.
    We anticipate that in order to provide the proposed certification, 
a certifier could rely, in part, on the review that would already be 
required in order for an issuer to comply with recently adopted Rule 
193.\39\ Rule 193 implements Section 945 of the Act by requiring that 
any issuer registering the offer and sale of an ABS perform a review of 
the assets underlying the ABS. Under the rule, at a minimum, such 
review must be designed and effected to provide reasonable assurance 
that the disclosure regarding the pool assets in the prospectus is 
accurate in all material respects. In addition to a review of the 
assets, the proposed certification, however, would require a review of 
the structure of the securitization.
---------------------------------------------------------------------------

    \39\ 17 CFR 230.193. In that rulemaking, we also added new Item 
1111(a)(7) to Regulation AB [17 CFR 229.1111(a)(7)] to require 
disclosure in prospectuses of the nature of the review of the assets 
performed by an issuer, including whether the issuer of any ABS 
engaged a third party for purposes of performing the review of the 
pool assets underlying an ABS and the findings and conclusions of 
the review of the assets. See Issuer Review of Assets in Offerings 
of Asset-Backed Securities, Release No. 33-9176 (Jan. 20, 2011) [76 
FR 4231] the ``January 2011 ABS Issuer Review Release'').
---------------------------------------------------------------------------

    Several commentators on the 2010 ABS Proposing Release opposed the 
certification requirement because they argued, in general, that the 
depositor's chief executive officer could not be expected to have the 
knowledge necessary to certify the performance of the securities.\40\ 
We understand that an executive officer of the depositor may rely on 
the work of other parties to assist him or her with structuring an ABS 
transaction. We do believe however, that the chief executive officer of 
a depositor should provide appropriate oversight so that he or she 
would be able to make the certification.
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    \40\ See letters from ABA; ABASA; Association of Mortgage 
Investors (AMI); ASF; BOA; CNH; Discover Financil Services 
(Discover); FSR; JP Morgan; Sallie Mae; SIFMA (dealers and 
sponsors); and Wells Fargo on the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    In the 2010 ABS Proposing Release, we also explained that the 
certification would be a statement of what is known by the signatory at 
the time of the offering and would not serve as a guarantee of payment 
of the securities. However, we received comment letters expressing 
general concern that the text of the proposed certification could be 
viewed as a guarantee of the future performance of the assets 
underlying the ABS.\41\ In contrast, one investor commentator noted 
that the certification would not serve as a guarantee, but instead 
would serve to create accountability and align interests, much like 
other certification requirements that already exist in the securities 
regulation and accounting practices.\42\ To address commentators' 
concerns, we are re-proposing the requirement to revise the text of the 
certification to state that the securitization is not guaranteed by 
this certification to produce cash flows at times and amounts 
sufficient to service the expected payments on the asset-backed 
securities. Furthermore, we have revised the language so that it no 
longer addresses how the securities ``will'' pay or perform but instead 
focuses on the design of the transaction.
---------------------------------------------------------------------------

    \41\ See letters from ASF (issuer members), ABASA, CRE Finance 
Council (CREFC) and Wells Fargo on the 2010 ABS Proposing Release.
    \42\ See letter from Vanguard on the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    We are also re-proposing the requirement in order to allow either 
the chief executive officer of the depositor or the executive officer 
in charge of securitization of the depositor to sign the certification. 
In the 2010 ABS Proposing Release, we had proposed that the chief 
executive officer of the depositor sign the certification. We explained 
that the chief executive officer of the depositor is already 
responsible as signatory of the registration statement for the issuer's 
disclosure in the prospectus and is subject to liability for material 
misstatements or omissions under the federal securities laws.\43\ We 
would expect that chief executive officers of depositors, as 
signatories to the registration statement, would have reviewed the 
necessary documents regarding the assets, transactions and 
disclosures.\44\ We believe that requiring the chief executive officer 
of the depositor to sign the certification is consistent with other 
signature requirements for asset-backed securities.\45\
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    \43\ See Securities Act Section 11 (15 U.S.C. 77k(a)) and 
Exchange Act Section 10(b) (15 U.S.C. 78j(b)).
    \44\ We also noted that an officer providing a false 
certification potentially could be subject to Commission action for 
violating Securities Act Section 17 (15 U.S.C. 77q(a)).
    \45\ See, e.g., Item 601(b)(31)(ii) of Regulation S-K (exhibit 
requirement for ABS regarding certification required by Exchange Act 
Rules 13a-14(d) and 15d-14(d)).
---------------------------------------------------------------------------

    In the 2010 ABS Proposing Release, we asked whether an individual 
in a different position should be required to provide the 
certification, and in particular, whether the senior officer in charge 
of securitization for the depositor should sign the certification. 
Moreover, the 2010 ABS Proposals included a requirement that the senior 
officer in charge of the securitization of the depositor sign the 
registration statement for ABS issuers, instead of the principal 
accounting officer or controller of the depositor.\46\ Several 
commentators suggested that the proposed certification be signed by the 
senior officer in charge of securitization of the depositor in order to 
provide consistency with our outstanding signature page proposal.\47\ 
We agree with commentators' suggestions and believe that requiring such 
individual to sign the certification would serve the goal of 
encouraging more extensive oversight of ABS transaction as well as 
being consistent with our other signature requirements for ABS issuers. 
However, we believe the officer signing the certification should be an 
executive officer. The definition of ``executive officer'' is already 
provided in Securities Act Rule 405.\48\ ``Executive officer in charge 
of

[[Page 47953]]

securitization'' rather than ``senior officer in charge of 
securitization'' is more consistent with our other regulations 
requiring executive officers be signators and our view that more 
extensive oversight by an executive officer may improve the quality of 
the securities. Therefore, we are proposing to require that an 
executive officer in charge of securitization be permitted to sign the 
certification.
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    \46\ In the 2010 ABS Proposing Release, we recognized that 
providing signatures of the principal accounting officer or 
controller of the depositor appears to serve no purpose because ABS 
issuers are not required to file financial statements under our 
rules or pursuant to their governing documents, and ABS issuers do 
not employ a principal accounting officer or controller. Thus, we 
stated our belief that requiring the senior officer in charge of the 
securitization to sign the registration statement would be more 
meaningful in the context of ABS offerings because it is more 
consistent with our other signature requirements for ABS issuers for 
Form 10-K. See the 2010 ABS Proposing Release at 23354.
    \47\ See letters from ABA; ABASA; ASF; JP Morgan; MBA and Wells 
Fargo on the 2010 ABS Proposing Release.
    \48\ The term executive officer, when used with reference to a 
registrant, means its president, any vice president of the 
registrant in charge of a principal business unit, division or 
function (such as sales, administration or finance), any other 
officer who performs a policy making function or any other person 
who performs similar policy making functions for the registrant. 
Executive officers of subsidiaries may be deemed executive officers 
of the registrant if they perform such policy making functions for 
the registrant. [17 CFR 230.405].
---------------------------------------------------------------------------

    Similar to the 2010 ABS Proposal, under the re-proposal, the 
statements required in the certification would be made based on the 
knowledge of the certifying person. We would expect that a chief 
executive officer and executive officer in charge of securitization of 
the depositor would have reviewed the necessary documents regarding the 
assets, transactions and disclosures. Under current requirements, the 
registration statement for an ABS offering is required to include a 
description of the material characteristics of the asset pool,\49\ as 
well as information about the flow of funds for the transaction, 
including the payment allocations, rights and distribution priorities 
among all classes of the issuing entity's securities, and within each 
class, with respect to cash flows, credit enhancement and any other 
structural features in the transaction.\50\ The proposed certification 
would be an explicit representation by the certifying person of what is 
implicit in what should already be disclosed in the registration 
statement.\51\ If the certifying person did not believe the 
securitization was designed to produce cash flows at times and in 
amounts sufficient to service expected payments on the asset-backed 
securities being registered, disclosure about such insufficiency would 
be required under Securities Act Rule 408 and Exchange Act Rule 10b-
5.\52\ Similarly, the executive officer would not be able to sign the 
certification if he or she knew or expected that the design of the 
securitization would not produce cash flows at times and in amounts 
sufficient to service expected payments on the asset-backed securities.
---------------------------------------------------------------------------

    \49\ See Item 1111 of Regulation AB [17 CFR 229.1111].
    \50\ See Item 202 of Regulation S-K [17 CFR 229.202] and Item 
1113 of Regulation AB [17 CFR 229.1113].
    \51\ This approach is somewhat similar to the approach we took 
with Regulation AC, which requires certifications from analysts. We 
noted there that Regulation AC makes explicit the representations 
that are already implicit when an analyst publishes his or her 
views--that the analysis of a security published by the analyst 
reflects the analyst's honestly held views. Section II of Regulation 
Analyst Certification, Release No. 33-8193 (Feb. 23, 2003) [68 FR 
9482].
    \52\ 17 CFR 230.408 and 17 CFR 240.10b-5.
---------------------------------------------------------------------------

    Commentators also were concerned about the scope of the 
certification because, as proposed, the certification would apply to 
``any payments of the securities as described in the prospectus.'' A 
few commentators raised the point that the lower or junior tranches of 
a securitization are offered at steep discounts because investors 
expect that the assets will not produce the cash flows necessary to 
service any payments of those securities.\53\ Those lower tranches 
typically have not been sold in registered transactions because they 
did not satisfy the current investment grade ratings transaction 
requirement. In order to provide clarity, we are re-proposing the text 
of the certification so that the certification would apply to the 
securities offered and sold pursuant to the registration statement and 
thus would not apply to privately offered and sold securities even if 
issued by the same issuing entity. Under our re-proposal, this 
certification would be an additional exhibit requirement for the shelf 
registration statement that would not be applicable to the non-shelf 
registration statement, proposed Form SF-1. We are proposing the 
certification be dated as of the date of the final prospectus under 
Rule 424 and would be required to be filed by the time the final 
prospectus is required to be filed under Rule 424.\54\
---------------------------------------------------------------------------

    \53\ See letters from ABA, ASF, and Sallie Mae on the 2010 ABS 
Proposing Release.
    \54\ See proposed revision to Item 601(b) of Regulation S-K.
---------------------------------------------------------------------------

    Reflecting revisions in response to comments, as described above, 
the revised proposed certification would be required to be provided by 
the CEO or the executive officer in charge of securitization for the 
depositor and would state that,
     The executive officer has reviewed the prospectus and is 
familiar with the structure of the securitization, including without 
limitation the characteristics of the securitized assets underlying the 
offering, the terms of any internal credit enhancements, and the 
material terms of all contracts and other arrangements entered in to 
effect the securitization;
     Based on the executive officer's knowledge, the prospectus 
does not contain any untrue statement of a material fact or omit to 
state a material fact necessary to make the statements made, in light 
of the circumstances under which such statements were made, not 
misleading;
     Based on the executive officer's knowledge, the prospectus 
and other information included in the registration statement of which 
it is a part, fairly present in all material respects the 
characteristics of the securitized assets underlying the offering 
described therein and the risks of ownership of the asset-backed 
securities described therein, including all credit enhancements and all 
risk factors relating to the securitized assets underlying the offering 
that would affect the cash flows sufficient to service payments on the 
asset-backed securities as described in the prospectus; and
     Based on the executive officer's knowledge, taking into 
account the characteristics of the securitized assets underlying the 
offering, the structure of the securitization, including internal 
credit enhancements, and any other material features of the 
transaction, in each instance, as described in the prospectus, the 
securitization is designed to produce, but is not guaranteed by this 
certification to produce, cash flows at times and in amounts sufficient 
to service expected payments on the asset-backed securities offered and 
sold pursuant to the registration statement.\55\
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    \55\ We note that an executive officer in delivering the 
certificate is precluded from taking into account external credit 
enhancements because the certification is expressly directed to the 
design of the securitization and whether or not taking into account 
the characteristics of the securitized assets underlying the 
offering, the structure of the securitization, including internal 
credit enhancements, and any other material features of the 
transaction, in each instance, as described in the prospectus, such 
securitization is designed to produce cash flows at times and in 
amounts sufficient to service expected payments on the asset-backed 
securities offered and sold pursuant to the registration statement. 
An example of an external credit enhancement is a third party 
insurance to reimburse losses on the pool assets or the securities.
---------------------------------------------------------------------------

Request for Comment
    1. Is our proposal to require a certification by the chief 
executive officer of the depositor or the executive officer in charge 
of securitization appropriate as a condition to shelf eligibility? 
Would the proposed certification encourage more extensive oversight of 
the transaction, and, therefore, be a partial indicator of an ABS that 
is a higher quality security?
    2. Does the re-proposed language clarify that the certification 
does not constitute a guarantee?
    3. Are the chief executive officer of the depositor or the 
executive officer in charge of securitization of the depositor the 
appropriate parties that should

[[Page 47954]]

provide the certification, as proposed? Some of our signature 
requirements related to ABS refer to ``senior officer in charge of 
securitization.'' \56\ Should we revise all of those references to 
conform so that they refer to executive officer in charge of 
securitization?
---------------------------------------------------------------------------

    \56\ The Form 10-K [17 CFR 249.310] report for ABS issuers must 
be signed either on behalf of the depositor by the senior officer in 
charge of securitization of the depositor, or on behalf of the 
issuing entity by the senior officer in charge of the servicing. In 
addition, the certifications for ABS issuers that are required under 
Section 302 of the Sarbanes-Oxley Act must be signed either on 
behalf of the depositor by the senior officer in charge of 
securitization of the depositor if the depositor is signing the Form 
10-K report, or on behalf of the issuing entity by the senior 
officer in charge of the servicing function of the servicer if the 
servicer is signing the Form 10-K report.
---------------------------------------------------------------------------

    4. Is the text of the proposed certification appropriate? Would 
having an executive officer certify that taking into account the 
structure of the transaction, the disclosure in the prospectus, the 
exhibits to the registration statement, and the information currently 
known to the executive officer about the securitized assets backing the 
securities offered and sold pursuant to the registration statement, 
there is a reasonable basis to conclude that those assets will generate 
cash flows in amounts and at times that will permit those securities to 
make the payments described in the transaction documents, achieve the 
same result as the proposed certification? Would this certification be 
appropriate if it also stated that this certification is only an 
expression of the executive officer's current belief and is not a 
guarantee that those assets will generate such cash flows, and there 
may be current facts not known to the executive officer and there may 
be future developments that would cause his or her opinion to change or 
that would result in those assets not generating such cash flows?
    5. Would it be more appropriate to tie the certification to current 
investment grade rating standards? For instance, should the executive 
officer certify that the securities being offered and sold under the 
registration statement have adequate capacity to meet financial 
commitments, similar to some definitions of investment grade 
securities?
    6. Are there other certifications that would more effectively 
promote accountability and oversight of the transaction by the 
executive officer, resulting in shelf eligible ABS being of a higher 
quality?
    7. Would a certification limited to the disclosure in the 
prospectus effectively promote accountability and oversight of the 
transaction by the executive officer resulting in shelf-eligible ABS 
being of higher quality? If so, would the following language be 
appropriate: I, [certifying individual], certify that:
    1. I have reviewed the prospectus relating to [title of securities 
the offer and sale of which are registered] and am familiar with the 
structure of the securitization, including the characteristics of the 
securitized assets underlying the offering, the terms of any internal 
credit enhancements and the material terms of all contracts and other 
arrangements entered in to the effect the securitization];
    2. Based on my knowledge, the prospectus does not contain any 
untrue statement of a material fact or omit to state a material fact 
necessary to make the statements made, in light of the circumstances 
under which such statements were made, not misleading; and
    3. Based on my knowledge, the prospectus and other information 
included in the registration statement of which it is a part, fairly 
present in all material respects the characteristics of the securitized 
assets underlying the offering described therein and the risks of 
ownership of the asset-backed securities described therein, including 
all credit enhancements and all risk factors relating to the 
securitized assets underlying the offering that would affect the cash 
flows sufficient to service payments on the asset-backed securities as 
described in the prospectus.
    8. We note above that the proposed certification would be an 
explicit representation of the certifying person of what is already 
implicit in the disclosure contained in the registration statement and 
that as a signatory of the registration statement for the issuer's 
disclosure in the prospectus, the executive officer can be liable for 
material misstatements or omissions under the federal securities laws. 
Would the certification create new potential liability for the 
certifier?
    9. If the CEO or executive officer in charge of securitization of 
the depositor provides the certification, as proposed, and obtains 
assistance from a third party, should we require disclosure about the 
third party? Should the disclosure requirement be the same as or 
similar to the possible disclosures regarding an independent evaluator 
that we describe below? If not the same, what disclosures about the 
third party should be required?
    10. Is it appropriate to require the certification be made as of 
the date of the final prospectus, as proposed? Should it instead be 
made as of the date when the securities are first sold? \57\ Or should 
it be made as of the date of the Rule 424(h) preliminary prospectus?
---------------------------------------------------------------------------

    \57\ [17 CFR 230.159]. Rule 159 provides the following: (a) For 
purposes of section 12(a)(2) of the Securities Act only, and without 
affecting any other rights a purchaser may have, for purposes of 
determining whether a prospectus or oral statement included an 
untrue statement of a material fact or omitted to state a material 
fact necessary in order to make the statements, in the light of the 
circumstances under which they were made, not misleading at the time 
of sale (including, without limitation, a contract of sale), any 
information conveyed to the purchaser only after such time of sale 
(including such contract of sale) will not be taken into account and 
(b) For purposes of section 17(a)(2) of the Act only, and without 
affecting any other rights the Commission may have to enforce that 
section, for purposes of determining whether a statement includes or 
represents any untrue statement of a material fact or any omission 
to state a material fact necessary in order to make the statements 
made, in light of the circumstances under which they were made, not 
misleading at the time of sale (including, without limitation, a 
contract of sale), any information conveyed to the purchaser only 
after such time of sale (including such contract of sale) will not 
be taken into account.
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    11. Is it appropriate to require the certification be filed as an 
exhibit to the registration statement at the time of the final 
prospectus by means of a Form 8-K, as proposed? Or would it be more 
appropriate to require the certification be filed at the same time as 
the proposed Rule 424(h) preliminary prospectus? \58\
---------------------------------------------------------------------------

    \58\ See discussion below in Section III.A.
---------------------------------------------------------------------------

    12. In lieu of the requirement that the chief executive officer or 
executive officer in charge of securitization of the depositor provide 
a certification, should we allow an opinion to be provided by an 
``independent evaluator'' regarding the ABS that would provide the same 
assurances as the certification? Would permitting such an opinion 
encourage appropriate oversight of the transaction structure for 
purposes of determining shelf eligibility? Would allowing an opinion by 
an independent evaluator give issuers the flexibility to engage a third 
party to give the certification that would otherwise be required of the 
CEO or the executive officer in charge of securitization? If we permit 
an independent evaluator to provide an opinion in lieu of an officer 
certification, would it be appropriate for us to require that the text 
of the opinion be the same as the proposed text for the certification 
by the CEO or executive officer in charge of securitization of the 
depositor?
    13. We note that if we permit an opinion to be provided, we 
anticipate that the opinion would need to be filed as an exhibit to the 
registration statement and the independent evaluator would need to 
consent to being named as an ``expert'' in the registration statement 
and be subject to

[[Page 47955]]

the liability provisions of Section 11 of the Securities Act.\59\ Would 
these requirements be appropriate? Would third parties be willing to 
act as independent evaluators on this basis?
---------------------------------------------------------------------------

    \59\ Section 7 of the Securities Act requires the consent of any 
person, whose profession gives authority to a statement made by him, 
is named as having prepared or certified any part of the 
registration statement, or is named as having prepared or certified 
a report or valuation for use in connection with the registration 
statement. See also Securities Act Section 11 [15 U.S.C. 77k].
---------------------------------------------------------------------------

    14. How would we define an independent evaluator for purposes of 
providing the opinion? For example, would it be appropriate to define 
an independent evaluator as a person who: (i) Has expertise and 
experience in structuring and evaluating asset-backed securities; (ii) 
is not affiliated with the issuer or any person involved in the 
organization or operation of the issuer; \60\ (iii) itself, and any of 
its affiliates, does not knowingly have, or does not have the intention 
to acquire, any direct or indirect beneficial interest in any 
securities issued or assets held by the issuer, and (iv) does not have 
any other material business or financial relationship with the issuer 
or any person involved in the organization or operation of the 
issuer.\61\ Should we impose any additional or different requirements 
on an independent evaluator?
---------------------------------------------------------------------------

    \60\ An ``affiliate'' of, or a person ``affiliated'' with, a 
specified person, is defined in Commission rules to mean ``a person 
that directly, or indirectly through one or more intermediaries, 
controls, or is controlled by, or is under common control with, the 
person specified.'' See, e.g., Securities Act Rule 405 and Exchange 
Act Rule 12b-2. The term ``control'' also is defined in those rules 
as ``the possession, direct or indirect, of the power to direct or 
cause the direction of the management and policies of a person, 
whether through the ownership of voting securities, by contract, or 
otherwise.''
    \61\ This requirement would not preclude an independent 
evaluator to serve as an independent evaluator in other ABS 
transactions of the same sponsor or depositor.
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    15. What steps should the issuer (or another person on behalf of 
the issuer) need to take to determine whether a prospective independent 
evaluator meets specified criteria? Should it be able to rely on a 
statement of the evaluator, for example, that it has the required 
expertise and experience?
    16. Would a provision prohibiting ownership of beneficial interests 
in securities issued by the issuer or assets held by the issuer and any 
other material business or financial relationships facilitate the 
evaluator's independence?
    17. Should we place limits on whether an independent evaluator in 
one transaction could serve as an independent evaluator in other ABS 
transactions of the same sponsor or depositor?
    18. What types of entities are likely to serve as independent 
evaluators? We anticipate that firms, such as asset management firms, 
consultants, credit enhancement providers and rating agencies could 
serve as independent evaluators. Should any types of persons or 
entities be excluded from being independent evaluators?
    19. Should rating agencies be permitted to serve as independent 
evaluators? If so, should a rating agency hired to issue a credit 
rating on an ABS also be able to serve as an independent evaluator on 
the same transaction?
    20. Would it be appropriate for a duly authorized person of the 
independent evaluator to sign on behalf of the independent evaluator? 
Should the signature of an individual from the independent evaluator be 
required?
    21. Should we require that if an opinion is provided by an 
independent evaluator, that the prospectus include specific information 
about the independent evaluator such as the name of the independent 
evaluator, its form of organization, its experience with evaluating 
ABS, the manner in which the independent evaluator was compensated for 
the certification, and to the extent material, any affiliations between 
the independent evaluator and the issuer as well as other transaction 
parties? In addition, should we add a requirement to describe the basis 
on which the person responsible for selecting the independent evaluator 
determined that the evaluator selected has the requisite expertise and 
experience? Should we require disclosure regarding the process 
undertaken by the opinion provider and the factual and analytical bases 
for such opinion? Should we require any additional disclosure?

(b) Credit Risk Manager and Repurchase Request Dispute Resolution 
Provisions

    Commentators on the 2010 ABS Proposing Release suggested that a 
different third party mechanism for investigating and resolving 
breaches of representations and warranties concerning the pool assets 
would better serve the interests of investors than the proposed shelf 
eligibility criterion regarding representations and warranties.\62\ 
Based on comments received on the 2010 ABS Proposing Release, we are 
proposing, as a second transaction requirement for ABS shelf offerings, 
that the underlying transaction documents of an ABS include provisions 
requiring that the trustee of the issuing entity appoint a credit risk 
manager to review the underlying assets upon the occurrence of certain 
trigger events and provide its report to the trustee of the findings 
and conclusions of the review of the assets. We are also proposing as a 
part of this shelf eligibility condition to require certain provisions 
in the underlying transaction agreements in order to resolve repurchase 
request disputes. As we explain further below, these proposals would be 
in lieu of the proposed shelf eligibility condition to require a 
provision in the pooling and servicing agreement to require the party 
obligated to repurchase assets for breach of representations and 
warranties to periodically furnish an opinion of an independent third 
party. We believe that this revised proposal would better strengthen 
the enforceability of contract terms surrounding the representations 
and warranties regarding the pool assets for ABS shelf transactions and 
incentivize obligated parties to better consider the characteristics 
and quality of the assets underlying the securities, making it an 
appropriate partial replacement for investment grade ratings.
---------------------------------------------------------------------------

    \62\ See letters from ABASA; ASF; BOA; JPMorgan; Metlife; 
Prudential Investment Management (Prudential); SIFMA; Group of 16 
Vehicle ABS Issuers (Vehicle ABS Group); Vanguard; Wells Fargo on 
the 2010 ABS Proposing Release. As we noted in previous Commission 
releases, the effectiveness of the contractual provisions related to 
representations and warranties has been questioned and the lack of 
responsiveness by sponsors to potential breaches of representations 
and warranties in the pool assets has been the subject of investor 
complaint. Transaction agreements typically have not included 
specific mechanisms to identify breaches of representations and 
warranties or to resolve a question as to whether a breach of the 
representations and warranties has occurred. Thus, these contractual 
agreements have frequently been ineffective because, without access 
to documents relating to each pool asset, it can be difficult for 
the trustee, which typically notifies the sponsor of an alleged 
breach, to determine whether or not a representation or warranty 
relating to a pool asset has been breached. See the 2010 ABS 
Proposing Release and Disclosure for Asset Backed Securities 
Required by Section 943 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, SEC Release No. 33-9175 (January 20, 2011) 
[76 FR 4489] (the ``943 Release'') at 4490.
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    We have noted in previous Commission releases that in the 
underlying transaction agreements for an asset securitization, sponsors 
or originators typically make representations and warranties relating 
to the pool assets and their origination, including representations 
about the quality of the pool assets.\63\ For instance, in the case of 
residential mortgage-backed securities, one typical representation and 
warranty is that each of the loans has complied with

[[Page 47956]]

applicable federal, state and local laws, including truth-in-lending, 
consumer credit protection, predatory and abusive laws and disclosure 
laws. Another representation that may be included is that no fraud has 
taken place in connection with the origination of the assets on the 
part of the originator or any party involved in the origination of the 
assets. Upon discovery that a pool asset does not comply with the 
representation or warranty, under transaction covenants, an obligated 
party, typically the sponsor, must repurchase the asset or substitute a 
different asset that complies with the representations and warranties 
for the non-compliant asset.
---------------------------------------------------------------------------

    \63\ See the 2010 ABS Proposing Release. See also the 943 
Release.
---------------------------------------------------------------------------

    In January 2011, we adopted new rules to implement Section 943 of 
the Act, requiring disclosure related to representations and warranties 
in ABS offerings (the ``943 Release''). While our new rules under 
Section 943 require disclosure of fulfilled and unfulfilled repurchase 
request activity, they do not directly address the enforceability, as a 
practical matter, of put back provisions in the underlying transaction 
agreements. As we noted in the 943 Release, the effectiveness of the 
contractual provisions related to representations and warranties has 
been questioned and lack of responsiveness by sponsors to potential 
breaches of the representations and warranties relating to the pool 
assets has been the subject of investor complaint.\64\
---------------------------------------------------------------------------

    \64\ See the 943 Release at 4490.
---------------------------------------------------------------------------

    In order to address this investor concern, in the 2010 ABS 
Proposing Release, we proposed a condition to shelf eligibility that 
would require a provision in the pooling and servicing agreement that 
would require the party obligated to repurchase the assets for breach 
of representations and warranties to periodically furnish an opinion of 
an independent third party regarding whether the obligated party acted 
consistently with the terms of the pooling and servicing agreement with 
respect to any loans that the trustee put back to the obligated party 
for violation of representations and warranties and which were not 
repurchased.\65\ Several commentators from both the issuer and investor 
community were concerned that this proposal was unduly complex, costly, 
and would not achieve its goals. Instead, commentators generally 
suggested that a better way to address the concern regarding 
enforceability of repurchase obligations related to breaches of 
representations and warranties would be to require a review of the 
underlying assets by an independent third party, or ``credit risk 
manager''.\66\ After considering the comment letters received, we are 
proposing as the second transaction requirement for shelf offerings to 
replace investment grade ratings, in lieu of the proposed requirement 
for a third-party opinion, that the underlying transaction documents 
include provisions requiring a credit risk manager to review the 
underlying assets upon the occurrence of certain trigger events that 
are described below. Under the proposal, the credit risk manager \67\ 
would be appointed by the trustee,\68\ not be affiliated with any 
sponsor, depositor or servicer in the transaction, and would have 
authorization to access the underlying loan documents.\69\ By requiring 
that the trustee appoint the credit risk manager and requiring that 
there be no affiliation with the sponsor, depositor or servicer, we are 
attempting to address any potential conflicts that could arise between 
the credit risk manager and the obligated party. In addition, we are 
requiring that the credit risk manager have access to copies of the 
underlying loan documents so it can perform its duties under the 
proposed requirement.
---------------------------------------------------------------------------

    \65\ See the 2010 ABS Proposing Release at 23344.
    \66\ See letters from ASF, ABASA, BOA, Vanguard, SIFMA, Wells 
Fargo, Metlife, Prudential, JPMorgan on the 2010 ABS Proposing 
Release.
    \67\ See proposed Item 1101(m) of Regulation AB.
    \68\ See letter from Prudential on the 2010 ABS Proposing 
Release.
    \69\ Under our proposal, the credit risk manager could also be 
the same party serving another role in the same transaction, such as 
the trustee, custodian or an operating advisor (as proposed in the 
Risk Retention Proposals) as long as it is not affiliated with the 
sponsor, depositor or servicer. See the Risk Retention Proposing 
Release at 24109. See also letters from ASF, BOA and SIFMA.
---------------------------------------------------------------------------

    We are proposing that the credit risk manager review the underlying 
assets of the ABS for compliance with the representations and 
warranties on the underlying pool assets upon the occurrence of trigger 
events which would be specified in the transaction agreements. We are 
proposing to require that the transaction agreements require, at a 
minimum, review by the credit risk manager (1) when the credit 
enhancement requirements, such as required reserve account amounts or 
overcollateralization percentages, as specified in the underlying 
transaction agreements, are not met; and (2) at the direction of 
investors pursuant to the processes provided in the transaction 
agreement and disclosed in the prospectus. These two trigger events 
should facilitate the ability of transaction parties to pursue 
transaction remedies, which we believe would be a feature of a higher 
quality security, as well as directly address commentators' concerns 
related to representations, warranties and enforcement mechanisms in 
underlying transaction agreements for the reasons we describe below. At 
the same time, we are not proposing to mandate that transaction parties 
follow specific procedures related to the review or repurchase process 
because we preliminarily believe transaction parties should have the 
flexibility to tailor the procedures to each ABS transaction, taking 
into account the specific features of the transaction and/or asset 
class. Our proposal would require that the transaction agreements 
require a review by the credit risk manager, at a minimum, in certain 
specified instances described below. However, the transaction 
agreements could, at the election of the transaction parties, specify 
additional triggers for a credit risk manager review. We also expect 
that the transaction parties may develop more specific and robust 
procedures for monitoring and reviewing the assets that support the 
ABS.\70\
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    \70\ Some commentators suggested that the credit risk manager be 
required to review the assets at other trigger events. ASF (investor 
members) and Metlife suggested that review be required at 
objectively defined trigger events such as when loans default 
shortly after origination, when loans become seriously delinquent 
(60 days), or when the servicer or trustee suspects a breach. ASF 
(sponsor members) suggested that review be required by terms of the 
transaction agreement only or when a bona fide and substantiated 
allegation of breach by a security holder is received. SIFMA 
suggested that review be required when the credit risk manager 
determines it is appropriate to assert a claim for breach on behalf 
of the securitization trust, in the interests of all investors in 
the aggregate, or as directed by an investor subject to certain 
standards. We request comment below on whether we should require any 
of these suggestions in addition to our proposals or as alternatives 
to our proposal.
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    Credit enhancement or other structural support for asset-backed 
securities can be provided in a variety of ways, including both 
internally structured support as well as externally provided 
enhancement or support.\71\ For example, internal credit enhancement is 
structured into the transaction to increase the likelihood that one or 
more classes of asset-backed securities will pay in accordance with 
their terms, such as subordination provisions, overcollateralization, 
reserve accounts, cash collateral accounts or spread accounts. 
Accordingly, the underlying transaction agreements typically require 
that internal credit enhancement be maintained at a specified amount. 
We believe it would be appropriate for the credit risk manager to 
review defaulted assets when the credit enhancements (including 
structural supports, such as subordination), fall below the required 
target levels, as specified in the

[[Page 47957]]

underlying transaction agreements, because if that happens, then losses 
may be higher than originally expected, thereby calling into question 
whether the defaulted assets met the representations and warranties 
provided in the underlying transaction documents.\72\
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    \71\ See the 2004 ABS Adopting Release at 1548.
    \72\ For example, if the overcollateralization target amount 
specified in the transaction document is 3%, then the credit risk 
manager would be required to conduct a review of the defaulted 
assets for compliance with representations and warranties when it 
falls below 3%.
---------------------------------------------------------------------------

    As we explained in the 943 Release, investors have demanded that 
trustees enforce repurchase covenants because transaction agreements do 
not typically contain a provision for an investor to directly make a 
repurchase demand.\73\ However, many investors have been frustrated 
with the structure and process because, as discussed above, trustees 
have not enforced repurchase rights and investors have been unable to 
locate other investors in order to force trustees to do so.\74\ In 
response to this concern, we are proposing as a part of the second 
shelf eligibility condition that the transaction agreements be required 
to provide a process whereby investors are able to direct the credit 
risk manager to review assets for potential breaches of a 
representation or warranty because we believe that such a requirement 
facilitates an investor's ability to pursue remedies under the 
transaction agreement, contributing to a higher quality security. As 
noted above, we are allowing for flexibility by not specifying the 
procedural requirements by which investors may make the request. 
However, because commentators on the 2010 ABS Proposing Release 
suggested several mechanisms that could be appropriate for investor-
directed review of assets and requests for repurchase, we are 
requesting comment on whether we should specify those procedures as 
conditions to shelf eligibility.\75\ Under the proposal, transaction 
parties would retain the flexibility to determine the appropriate 
procedures and times for investor-directed review of underlying assets 
for each ABS and whatever mechanism is provided would be described in 
the prospectus.
---------------------------------------------------------------------------

    \73\ See the 943 Release at 4498.
    \74\ Typically, investor rights require a minimum percentage of 
investors acting together in order to enforce the representation and 
warranty provisions contained in the underlying transaction 
agreements. We discuss our ABS shelf proposal related to investor 
communication in Section II.B.1.c. below. See also Alex Ulam, 
``Investors Try to Use Trustees as Wedge in Mortgage Put-Back 
Fight,'' American Banker (Jun. 27, 2011) (noting that investor votes 
are required in order to force a trustee to take action).
    \75\ See letter from Metlife on the 2010 ABS Proposing Release 
(suggesting that bondholders representing 5% or more of a 
transaction be able to direct the trustee to poll investors on 
whether to initiate a review of assets. Following such a vote, the 
sponsor would need to repurchase any non-compliant asset and if the 
sponsor did not comply, then disputes would be submitted to 
independent arbitration). See also letters from ASF and SIFMA on the 
2010 ABS Proposing Release.
---------------------------------------------------------------------------

    We are also proposing to require as part of the second shelf 
eligibility condition that the underlying transaction agreements 
require that the credit risk manager provide its report to the trustee 
of the findings and conclusions of its review of the assets.\76\ The 
trustee could then use the report to determine whether a repurchase 
request would be appropriate under the terms of the transaction 
agreements, thereby enhancing the effectiveness of the contract 
provisions of the ABS contributing to the higher quality of the 
securities. Although we are not proposing to specify the format of the 
report, we are requesting comment on whether specifying the format of 
the report is necessary.
---------------------------------------------------------------------------

    \76\ A ``report of findings and conclusions'' of a review is 
similar in concept to the requirements of new Rule 193 and Item 
1111(a)(7) of Regulation AB. As discussed above, those new rules 
will require the issuer of an ABS to conduct a review of the pool 
assets underlying an ABS at the time of securitization and disclose 
of the findings and conclusions of the review of the assets. See 
Section II.B.1.a. and fn. 39. We note that the issuer review would 
be performed at the time of securitization, while the proposed 
credit risk manager review would be performed pursuant the processes 
provided in an underlying transaction agreement.
---------------------------------------------------------------------------

    We are proposing disclosure requirements in prospectuses and in 
ongoing reports about the credit risk managers. In prospectuses, we are 
proposing to require disclosure of the name of the credit risk manager, 
its form of organization, the extent of its experience serving as a 
credit risk manager for ABS transactions involving similar pool assets, 
and the manner and amount in which the credit risk manager is 
compensated for its services.\77\ In addition, disclosure would be 
required about the credit risk manager's duties and responsibilities 
under the governing documents and under applicable law, any limitations 
on the credit risk manager's liability under the transaction 
agreements, any indemnification provisions, and any contractual 
provisions or understanding regarding the credit risk manager's 
removal, replacement or resignation, as well as how any related 
expenses would be paid.\78\ Further, disclosure would be required, to 
the extent material, about any affiliations and relationships between 
the credit risk manager and other transaction parties.\79\ These 
disclosure requirements are similar to current disclosure requirements 
for trustees.\80\
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    \77\ See proposed Item 1109(c) of Regulation AB in the 2010 ABS 
Proposing Release.
    \78\ See proposed Item 1109(c) of Regulation AB in the 2010 ABS 
Proposing Release.
    \79\ See proposed Item 1119(a)(7) of Regulation AB in the 2010 
ABS Proposing Release.
    \80\ See Item 1109 of Regulation AB [17 CFR 229.1109].
---------------------------------------------------------------------------

    In ongoing reports on Form 10-D, if during the distribution period 
the credit risk manager is required to review the assets, we are 
proposing to require disclosure of the event(s) that triggered the 
review by the credit risk manager during the distribution period. We 
are also proposing that if a report by the credit risk manager of the 
findings and conclusions of its review of assets that is provided to 
the trustee during the distribution period, that the full report be 
filed as an exhibit to the Form 10-D.\81\ In addition, we are proposing 
that if, during the distribution period, a credit risk manager has 
resigned, or has been removed, replaced or substituted, or if a new 
credit risk manager has been appointed, disclosure would be required of 
the date the event occurred, and the circumstances surrounding the 
change. If a new credit risk manager has been appointed, disclosure 
required by proposed Item 1109(b) of Regulation AB would be required.
---------------------------------------------------------------------------

    \81\ The report would be filed as an additional exhibit under 
Exhibit 99. See Item 601(b)(99) of Regulation S-K [17 CFR 
229.601(b)(99)].
---------------------------------------------------------------------------

    In order to provide a timely mechanism for enforcement of 
repurchase requirements, we are also proposing to require as a part of 
the second condition to shelf eligibility that the underlying 
transaction documents include repurchase request dispute resolution 
procedures. Under the proposal, the transaction agreements would be 
required to provide that if an asset, subject to a repurchase request 
pursuant to the terms of the transaction agreements, is not repurchased 
by the end of the 180-day period beginning when notice is received, 
then the party submitting such repurchase request shall have the right 
to refer the matter, at its discretion, to either mediation or third-
party arbitration, and the party obligated to repurchase must agree to 
the selected resolution method.\82\ Our proposal would give a 
requesting party the ability to compel the obligated party to submit to 
dispute resolution if the obligor did not repurchase the assets. 
However, because we understand that a party obligated to repurchase 
will need the time to investigate a repurchase request, our proposal 
would allow 180

[[Page 47958]]

days before a requesting party had the right to compel mediation or 
arbitration.\83\ Of course, the transaction agreements could call for a 
period shorter than 180 days.
---------------------------------------------------------------------------

    \82\ See, e.g., letters from Center for Audit Quality (CAQ), 
Group of 14 CMBS investors (CMBS Investors), Ernst & Young (E&Y), 
Prudential on the 2010 ABS Proposing Release.
    \83\ See letter from Prudential on the 2010 ABS Proposing 
Release (suggesting that a sponsor should have a specified amount of 
time to challenge any third party claim). See also letter from SIFMA 
on the 2010 ABS Proposing Release (suggesting that arbitration be 
available if the parties do not resolve the repurchase request 
within 180 days).
---------------------------------------------------------------------------

    We believe that investors and issuers should both benefit from our 
proposals to require a credit risk manager and the proposed repurchase 
request dispute resolution provisions because they are designed to 
facilitate a timely resolution of repurchase claims. We also believe 
that these mechanisms are appropriate as one of the requirements for 
shelf eligibility because they provide enhanced mechanisms for 
transaction parties to pursue contract remedies, thereby contributing 
to the quality of the security. Our proposal does not specify whether 
mediation or arbitration must be agreed to by the obligated party in 
the dispute resolution provision. We preliminarily believe that the 
requesting party should have the flexibility to select the appropriate 
mechanism to resolve repurchase disputes, although we request comment 
on whether we should mandate one or the other.
Request for Comment
    22. Is the requirement of a credit risk manager review of the 
underlying assets appropriate as a condition for shelf eligibility, as 
proposed? Is it appropriate to require certain terms requiring 
repurchase dispute resolution in the underlying transaction documents, 
as a condition for shelf eligibility, as proposed?
    23. Is it appropriate to require that the trustee appoint the 
credit risk manager, as proposed? Should another party be able to 
appoint the credit risk manager? Should we specify terms for removal 
and re-appointment of the credit risk manager?
    24. Is it appropriate to require that the credit risk manager not 
be an affiliate of any sponsor, depositor, or servicer, as proposed? 
Would an affiliate of the sponsor, depositor or servicer be able to 
objectively perform the credit risk manager review function? Should we 
require that the credit risk manager be required to represent that no 
conflict of interest exists between itself and any transaction party, 
including investors? \84\ Would it be appropriate for the trustee to 
also be the credit risk manager?
---------------------------------------------------------------------------

    \84\ See letter from Prudential on the 2010 ABS Proposing 
Release.
---------------------------------------------------------------------------

    25. Is it appropriate to require that the credit risk manager be 
given access to copies of the underlying documents related to the pool 
assets, as proposed? Should the requirement be limited in any way? Are 
there any privacy considerations? If so, should we require a covenant 
in the underlying transaction documents that all information be kept 
confidential?
    26. Should we specify an additional requirement that the credit 
risk manager be given access to all underwriting guidelines and any 
other documents necessary to evaluate the loans? \85\
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    \85\ See letter from SIFMA on the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    27. What types of entities are likely to serve as credit risk 
managers? Should any types of persons or entities be excluded from 
being credit risk managers?
    28. Are the proposed triggers for review by the credit risk manager 
appropriate? Is it appropriate to require review when a transaction's 
required credit enhancement falls below defined target levels, as 
proposed? Should we specify which types of credit enhancement would be 
subject to the requirement (e.g., overcollateralization, reserve 
account)? If so, what types of credit enhancement features should we 
specify and why? Are there any asset classes, or securitization 
structures, where no target credit enhancement is specified? Is it 
appropriate that triggers relating to credit enhancement include 
structural supports, such as subordination? Are there any other 
features that should be or should not be included as credit enhancement 
for purposes of triggering a credit risk manager review?
    29. As noted above, we intend that shelf-eligible transaction 
agreements, at a minimum, provide for the specified trigger events for 
a credit risk manager review. Will market practice develop to add 
additional triggers, if any, as circumstances warrant?
    30. Is it appropriate to require review by the credit risk manager 
at the direction of investors, pursuant to the processes provided in 
the transaction agreement and disclosed in the prospectus? Should we 
specify the procedures for the investor directed review process? If so, 
what should the requirements be and why? For example, should we require 
that investors representing 5% or more of investors in interest (i.e., 
investors that are not affiliates of the sponsor or servicer) be able 
to direct a review? Should the percentage of investors required to 
initiate a review be higher or lower? If the percentage is higher, such 
as 25%, should we require that investors representing 5% or more of 
investors in interest first be able to direct the trustee to poll 
investors on whether to initiate a review of assets? \86\ As an 
alternative to specifying procedures, would it be appropriate to 
specify certain maximum conditions, where the percentage of investors 
required to direct review could be no more than a certain percentage, 
such as 5%, 10%, or 25%?
---------------------------------------------------------------------------

    \86\ See letter from Metlife on the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    31. Is our proposal to require a provision that the credit risk 
manager provide its report to the trustee of the findings and 
conclusions of its review of the assets appropriate? Should we specify 
the format of the report?
    32. Is our proposal to require the report of the credit risk 
manager be filed as an exhibit to the Form 10-D filing covering the 
period in which the report is given to the trustee appropriate? Should 
it be filed sooner, such as on a Form 8-K within four business days of 
receipt by the trustee? Should we also require that a summary of the 
report by the credit risk manager of the findings and conclusions of 
its review of assets be included in the Form 10-D?
    33. Are the proposed disclosure requirements in prospectuses 
regarding credit risk managers appropriate? Should we require any 
additional disclosure?
    34. Should our rules include any other specific triggers for 
review? Should we require review based on specific triggers, such as 
the occurrence of delinquency of a specified duration, such as 60, 90, 
or 120 days? Should we require review of early payment defaults, (e.g., 
loans that become delinquent within the first 60, 90 or 120 days past 
origination)? \87\ Should we require review of all loans for which the 
servicer or trustee suspects a breach? If so, how should we define this 
trigger? Would any of these requirements be in addition to, or as an 
alternative to the proposed requirements?
---------------------------------------------------------------------------

    \87\ See letter from Metlife on the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    35. Should we require that the credit risk manager have discretion 
to assert a claim for breach on behalf of the securitization trust, in 
the interests of all investors in the aggregate? \88\ Would this 
requirement be in addition to, or as an alternative to the proposed 
requirements? Should we specify some or all of the procedures related 
to the review or repurchase process?
---------------------------------------------------------------------------

    \88\ See letter from SIFMA on the 2010 ABS Proposing Release.

---------------------------------------------------------------------------

[[Page 47959]]

    36. Is our proposal to require ongoing disclosure about the credit 
risk manager and its activities in Form 10-D appropriate? Is our 
proposal to require disclosure about the event(s) that triggered a 
credit risk manager review appropriate? Is it appropriate to require 
the disclosure only with respect to those triggers that are proposed 
for shelf eligibility (i.e., credit enhancement trigger and investor 
directed review), as proposed? Or should disclosure be required with 
respect to any review undertaken by a credit risk manager, pursuant to 
the provisions in the agreement?
    37. Is it appropriate to require disclosure in the Form 10-D of a 
change of credit risk manager as proposed?
    38. In addition to the proposed shelf eligibility and disclosure 
requirements, should we require that each party with a repurchase 
obligation provide an annual certificate to the trustee and noteholders 
certifying that all loans required to be repurchased under the 
transaction documents have been repurchased or detail why any loans 
identified as breaching a representation or warranty were not 
removed.\89\
---------------------------------------------------------------------------

    \89\ See letter from Sallie Mae on the 2010 ABS Proposing 
Release.
---------------------------------------------------------------------------

    39. Is our proposal to require dispute resolution provisions in the 
underlying transaction documents as a shelf eligibility condition, 
appropriate? Is it appropriate to require that requesting parties wait 
180 days until they can force the obligated part to submit to dispute 
resolution? Should the period be longer or shorter? Should we not 
specify a particular period, but instead require there to be a set time 
period in the transaction agreements? Is it appropriate to require that 
the obligated party agree to either mediation or arbitration, as 
proposed? Should we require that all the parties agree to either 
mediation or arbitration? Or should we require one or the other? Is it 
appropriate to require that the transaction documents provide that 
investors, in their sole discretion, may elect whether to refer a 
disputed repurchase request to arbitration or mediation? Would it be 
more appropriate to require that the transaction documents provide for 
a mandatory dispute resolution mechanism (specifying mediation or 
arbitration) after 180 days, and disclose the mandatory dispute 
resolution mechanism in the prospectus, without mandating the details 
of those provisions?
    40. Should we specify who should pay the expenses for mediation or 
arbitration of the repurchase request? For example, should we require 
that expenses related to the mediation or arbitration of a repurchase 
request be paid by the obligated party, the person(s) requesting 
repurchase, or the issuing entity? Or should expenses be the 
responsibility of the losing party, or should costs be shared? Is it 
clear who the losing party would be in mediation? Or should costs be 
determined by the mediator or arbitrator? Would specifying that the 
obligated party is required to cover all costs associated with 
mediation or arbitration of the repurchase request provide further 
incentive for the obligated party to resolve the request within 180 
days? If so, do the benefits of this additional incentive justify the 
potential costs imposed on the obligated party? If a trustee is the 
requesting party, and it is determined that the trustee is obligated to 
pay expenses (by the terms of transaction agreement, the outcome of the 
dispute resolution procedures, or otherwise) how would the trustee pay 
for the expenses? Would the possible obligation to pay for the 
expenses, be yet another disincentive for trustees so they would not 
initiate a repurchase request?
    41. Should we require that if the obligated party fails to agree to 
mediation or arbitration of any unresolved repurchase dispute within 
such period, the obligated party would be required to honor the 
repurchase request? \90\
---------------------------------------------------------------------------

    \90\ See letter from Prudential on the 2010 ABS Proposing 
Release.
---------------------------------------------------------------------------

(c) Investor Communication

    As we discussed above, we are aware that investors have had 
difficulty enforcing rights contained in transactions agreements, and 
in particular, those relating to the repurchase of underlying assets 
for breach of representations and warranties. Investors have raised 
concerns regarding the inability to locate other investors in order to 
enforce these rights.\91\ Frequently, these investor rights require a 
minimum percentage of investors acting together. In response to the 
2010 ABS Proposing Release, one commentator noted that because most ABS 
are held by custodians or brokers in ``street name'' through the 
Depository Trust Company, as a practical matter it is very difficult 
for ABS investors to communicate with each other in order to jointly 
exercise any of their substantive protections or rights provided in the 
transaction documents.\92\ Another commentator expressed that given the 
complexity of securitization structures and the underlying collateral 
it is important for investors who have identified concerns with the 
collateral or any structural issue to be able to effectively 
communicate with other investors in the transaction and to either 
prompt the trustee to take action or solicit further direction from 
investors.\93\
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    \91\ See Alex Ulam, ``Investors Try to Use Trustees as Wedge in 
Mortgage Put-Back Fight,'' American Banker (Jun. 24, 2011) (noting 
that many attempted put-backs have ``flamed out after investor 
coalitions failed to get the 25% bondholder votes that pooling and 
servicing agreements require for a trustee to be forced to take 
action against a mortgage servicer''). See also Tom Hals and Al 
Yoon, ``Mortgage Investors Zeroing in on Subprime Lender,'' Thomson 
Reuters (May 9, 2011) (noting that gathering the requisite number of 
investors needed to demand accountability for faulty loans pooled 
into investments is a ``laborious'' task).
    \92\ See letter from Metlife on the 2010 ABS Proposing Release 
(suggesting that the Commission mandate that one ABS transaction 
party have real-time knowledge of the legal names and contact 
information of the beneficial owners of each of the bonds in the 
issuance so that bondholders could request that such transaction 
party (likely the trustee) send communications to the other 
bondholders notifying them of suspected breaches of representations 
and warranties, thus protecting investor identity, but also 
addressing the collective action problem). The Depository Trust 
Company provides custody and book-entry transfer services of 
securities transactions in the U.S. market involving equities, 
corporate and municipal debt, money market instruments, American 
depositary receipts, and exchange-traded funds. In accordance with 
its rules, DTC accepts deposits of securities from its participants 
(i.e., broker-dealers and banks), credits those securities to the 
depositing participants' accounts, and effects book-entry movements 
of those securities.
    \93\ See letter from Prudential on the 2010 ABS Proposing 
Release (suggesting that a group of 10% investor interest should be 
able to initiate communication with others through the trustee).
---------------------------------------------------------------------------

    In connection with these concerns, we are proposing, as a third 
shelf eligibility requirement, that an underlying transaction agreement 
include a provision to require the party responsible for making 
periodic filings on Form 10-D to include in the Form 10-D any request 
from an investor to communicate with other investors related to an 
investor's rights under the terms of the ABS that was made during the 
reporting period received by the party responsible for making the Form 
10-D filings where the request is received on or before the end date of 
a reporting period.\94\ By requiring the provision be included in an 
underlying agreement, the party responsible for making Form 10-D 
filings would be

[[Page 47960]]

contractually obligated to disclose an investor's desire to 
communicate. We preliminarily believe this is an appropriate 
requirement for shelf eligibility because facilitating communication 
among investors enables them to exercise the rights included in the 
underlying transaction agreements, which we believe would address a 
specific concern about enforceability of representations and warranties 
raised in ABS transactions and would help to distinguish higher quality 
ABS from other ABS.
---------------------------------------------------------------------------

    \94\ Most ABS issuers report and distribute payments to 
investors on a monthly basis. The Form 10-D is required to be filed 
within fifteen days after a required distribution date, and a 
distribution date is typically two weeks after the end of a 
reporting period. For example, for the month of June, under our 
proposal a request from an investor would have to be received prior 
to the close of the reporting period on June 30, a distribution 
would be due to investors by July 15, and the Form 10-D filing due 
date would be July 30.
---------------------------------------------------------------------------

    We are also proposing to revise Regulation AB and Form 10-D to 
include the disclosure requirements related to the investor 
communication shelf eligibility condition. The disclosure requirements 
would only apply if the transaction was a registered shelf offering. We 
are proposing that the disclosure on Form 10-D be required to include 
the name of the investor making the request; the date the request was 
received; and a description of the method by which other investors may 
contact the requesting investor.\95\ Under the proposal, we are 
including an instruction to Item 1121(g) to define the type of 
communications that may be facilitated as a result of the required 
notices on Form 10-D. The Form 10-D would be required to include 
disclosure of only those notices of an investor's desire to communicate 
where the communication relates to investors exercising their rights 
under the terms of the ABS. Thus, an ABS investor would not be 
permitted to use this mechanism for other purposes, such as identifying 
potential customers, marketing efforts, or the like.\96\
---------------------------------------------------------------------------

    \95\ See proposed Item 1121(f) and Item 1.B. of Form 10-D.
    \96\ To the extent an investor wishes to communicate with other 
investors about other matters, the investor must consider the 
potential applicability of other regulatory provisions under the 
federal securities laws. For example, an investor proposing to 
commence a tender offer for securities in the ABS class must 
evaluate whether such a communication is subject to Exchange Act 
Sections 14(d) and 14(e) and Regulations 14D and 14E thereunder.
---------------------------------------------------------------------------

    We understand that transaction parties might want to specify 
procedures for verifying the identity of a beneficial owner in a 
particular ABS prior to including the proposed notice in a Form 10-D. 
While we are not proposing specific procedural requirements, we believe 
the procedures should be simple for an investor to follow so that the 
party responsible for making the disclosure could verify the interest 
of an investor in the ABS. Therefore, we are proposing an instruction 
to the shelf eligibility requirement to make clear that the 
verification requirements that could be contained in the transaction 
documents, may require no more than the following: (1) If the investor 
is a record holder of the securities at the time of a request to 
communicate, then the investor would not have to provide verification 
of ownership because the person obligated to make the disclosure will 
have access to a list of record holders and (2) if the investor is not 
the record holder of the securities at the time of the request to 
communicate, the person obligated to make the disclosure must receive a 
written statement from the record holder verifying that, at the time 
the request is submitted, the investor beneficially held the 
securities.
Requests for Comment
    42. Is our proposal to require a provision in the transaction 
agreements to require an investor's request to communicate with other 
investors to be included on Form 10-D reports an appropriate condition 
to shelf eligibility? Would investors find the provision valuable?
    43. Is the proposed disclosure requirement on Form 10-D 
appropriate? Should it require different information? Should we 
prescribe a pre-set list of objective categories that an investor could 
choose from for the purpose of indicating why it is requesting 
communication with other investors? If so, what should be the list of 
defined categories? Would the following be an appropriate list of 
present categories: Servicing, trustee, representations and warranties, 
voting matters, pool assets, and other?
    44. Under the proposal, the Form 10-D would be required to include 
requests received during the reporting period for the form. Are there 
any timing concerns? Should the request to communicate instead be 
required to be filed on Form 8-K?
    45. Is the proposed instruction clarifying the maximum type of 
verification procedures that may be included in the underlying 
transaction documents appropriate? Are they reasonable requirements to 
demonstrate ownership? Is the limitation on requirements proving 
ownership, assuming the holder is not the record holder, necessary or 
appropriate? Are there other procedures that we should require, or 
limitations we should impose? Would those be in addition to or in lieu 
of those described in the proposed instruction? Are there procedures 
that would be easier for investors to meet but would have the same 
effect?
    46. We understand that investors are often able to obtain reports 
related to an ABS they own by accessing a password protected Web site, 
usually maintained by the trustee. Should the list of investors that 
have access to the Web site be enough to verify the interest of an 
investor?
    47. Relatedly, investors have advised us that they sometimes have 
difficulty receiving notices for investor votes, and, therefore, have 
not been able to participate in that process. Should we require a Form 
8-K be filed to disclose that an investor vote has been noticed? Should 
the Form 8-K include a copy of the notice? Should the Form 8-K be filed 
within a specified minimum period of the notice, such as two days? Or 
would a shorter or longer due date be more appropriate? What other 
mechanisms would be appropriate to facilitate the ability of an 
investor to exercise their right to vote and at the same time be 
appropriate requirements for shelf eligibility?
    48. We understand that a number of privately placed CMBS 
transactions have included more extensive means for investor 
communication. The following requests for comment are based on our 
understanding of those transactions. Are these types of arrangements 
prevalent in CMBS deals? Are they used with other asset classes?
    49. Instead of allowing verification of an investor's interest at 
the time a request to communicate is made, should we instead require as 
a condition to shelf eligibility that an underlying transaction 
agreement require the trustee, or some other transaction party, to 
maintain a list of investors and require the request to be included in 
the Form 10-D only if the investor is included on the list? If so, how 
would the person responsible for maintaining the list of investors 
obtain and maintain the information? Should a form of investor 
verification be required to be specified in the underlying transaction 
agreement in connection with this shelf eligibility condition? If so, 
when should the investor be required to provide the completed form?
    50. Should we require, as a condition to shelf eligibility, that 
the investor communication notice be distributed in any other way, in 
addition to, or instead of the Form 10-D? For instance, should we 
require that the notice be posted on a designated Web site? If so, when 
should it be posted? Alternatively, should the notice be required to be 
distributed to investors by the trustee or some other transaction 
party? If so, should the notice be required to be distributed only to 
those investors that voluntarily provide their contact information to 
the trustee or a person responsible for maintaining an investor

[[Page 47961]]

list? Would there be any reason that an investor would not provide 
their contact information? If all investors did not provide their 
contact information, we expect there would be a possibility that the 
list of investors would not be complete. Would that frustrate the 
purposes of this approach?
2. Revised and Re-Proposed Registrant Requirements
    In the 2010 ABS Proposals, we proposed to add new registrant 
requirements related to compliance with the four proposed transaction 
requirements (i.e., risk retention, third party opinion provision in 
transaction agreements, officer certification, and an undertaking to 
file ongoing Exchange Act reports).\97\ We also proposed to retain the 
existing registrant requirement in Form S-3 relating to delinquent 
filings of the depositor or an affiliate of the depositor for purposes 
of proposed Form SF-3. Similar to existing requirements, we proposed 
that prior to filing a registration statement on proposed Form SF-3, to 
the extent the depositor or any issuing entity previously established 
by the depositor or an affiliate of the depositor are or were at any 
time during the twelve month look-back period required to file Exchange 
Act reports with respect to a class of asset-backed securities 
involving the same asset class, such depositor and each such issuing 
entity must have filed all material required to be filed during the 
twelve months (or shorter period that the entity was required to have 
filed such materials).\98\ Also, such material, other than certain 
specified reports on Form 8-K, must have been filed in a timely 
manner.\99\ This proposal remains unchanged and outstanding. In the 
2010 ABS Proposal, we also proposed to repeal the existing exception 
from the filing timeliness requirement for Item 6.05 Form 8-K reports. 
Item 6.05 Form 8-K reports are required to be filed if there is a 
change in the asset pool characteristics from the description of the 
asset pool provided in the final prospectus and, thereby, provide 
important information regarding the composition of the assets.\100\ The 
proposal to require the timely filings of Item 6.05 Form 8-K reports 
remains unchanged and outstanding. The revised and re-proposed 
registrant requirements for shelf eligibility are described below.
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    \97\ See proposed General Instructions I.A.1. to I.A.4. of 
proposed Form SF-3 in the 2010 ABS Proposing Release.
    \98\ For Form S-3, an issuer is not eligible for registration on 
the form if the depositor or an affiliate of the depositor, with 
respect to a class of asset-backed securities involving the same 
asset class, has not filed the Exchange Act reports required to be 
filed or has not filed such reports in a timely manner for a period 
of twelve months prior to the filing of the registration statement. 
See General Instruction I.A.4 of Form S-3.
    \99\ See proposed General Instruction I.A.3 to Form SF-3.
    \100\ In the 2010 ABS Proposing Release, we also proposed to 
lower the threshold amount of change that would trigger a filing 
requirement for Item 6.05 Form 8-K reports from five percent of any 
material pool characteristic to one percent. That proposal remains 
outstanding. See the 2010 ABS Proposing Release at 23392.
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    In light of the changes to the proposed amendments to the 
transaction requirements described in Section II.B.1. above, we are 
revising and re-proposing the other registrant requirements to make 
conforming changes. Specifically, we are proposing to require that to 
the extent the depositor or any issuing entity previously established 
by the depositor or an affiliate of the depositor is or was at any time 
during the twelve month look-back period required to comply with the 
proposed transaction requirements of Form SF-3, with respect to a 
previous offering of asset-backed securities involving the same asset 
class, the following requirements would apply:
     Such depositor and each such issuing entity must have 
timely filed all the required certifications of the depositor's chief 
executive officer or the depositor's executive officer in charge of 
securitization;
     Such depositor and each such issuing entity must have 
timely filed all the transaction agreements that contain the required 
provisions relating to the credit risk manager and repurchase request 
disputes; and
     Such depositor and each such issuing entity must have 
timely filed all the transaction agreements that contain the required 
provision relating to investor communication.
    In addition, in the 2010 ABS Proposing Release, we proposed to 
include as a separate registrant requirement that there be disclosure 
in the registration statement stating that the proposed registrant 
requirements have been complied with. We continue to believe disclosure 
of compliance with the registrant requirements would provide a means 
for market participants (as well as the Commission and its staff) to 
better oversee compliance with the proposed shelf eligibility 
conditions of Form SF-3. We believe that the requirement is more 
appropriately located in the instructions to the requirements rather 
than as a registrant requirement and, therefore, are proposing to 
include this requirement as an instruction.
Request for Comment
    51. Are our re-proposed registrant requirements appropriate?
    52. Is the twelve-month look-back period appropriate for compliance 
with the certification, credit risk manager and repurchase dispute 
resolution transaction requirements, and the investor communication 
provision? Should it be longer or shorter?
    53. Is our proposed instruction to require disclosure in a 
registration statement of compliance with the registrant requirements 
appropriate? Should we specify a location in the registration statement 
for such disclosure?

54. Should we require that registrants provide a ``yes'' or ``no'' 
answer to whether it has complied with all the registrant requirements? 
If so, should the data be tagged in XML so that it could be an 
electronically searchable piece of data? \101\
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    \101\ We briefly discuss XML tagging below in Section III.B.
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3. Annual Evaluation of Form SF-3 Eligibility in Lieu of Section 
10(a)(3) Update

(a) Annual Compliance Check Related to Timely Exchange Act Reporting

    In the 2010 ABS Proposing Release, we proposed to require annual 
and quarterly evaluations of compliance with the registrant 
requirements for ABS shelf eligibility. For the evaluation of 
compliance with the Exchange Act reporting registrant requirement, we 
proposed to require an annual evaluation of whether the Exchange Act 
reporting registrant requirement has been satisfied in lieu of a 
Securities Act Section 10(a)(3) update.\102\ Under the 2010 ABS 
Proposal, an ABS issuer wishing to conduct a takedown off an effective 
shelf registration statement would be required to evaluate whether the 
depositor and any affiliated issuing entity of the depositor that were 
required to report under Sections 13(a) or 15(d) of the Exchange Act 
during the previous twelve months, have filed such reports on a timely 
basis, as of ninety days after the end of the depositor's

[[Page 47962]]

fiscal year end.\103\ This proposal remains unchanged and outstanding.
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    \102\ As noted in the 2010 ABS Proposing Release, Form S-3 
eligibility under the current rules is determined at the time of 
filing the registration statement and at the time of updating that 
registration statement under Securities Act Section 10(a)(3) [15 
U.S.C. 77j(a)(3)] by filing audited financial statements. Because 
ABS registration statements do not contain financial statements of 
the issuer, a periodic determination of whether the issuer can 
continue to use the shelf would need to be specified by rule. See 
Securities Act Rule 401(b) [17 CFR 230.401(b)].
    \103\ As noted in the 2010 ABS Proposing Release, under this 
proposal the related registration statement could not be utilized 
for subsequent offerings for at least one year from the date the 
depositor or the affiliated issuing entity that had failed to file 
Exchange Act reports then became current in its Exchange Act reports 
(and the other requirements had been met).
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(b) Annual Compliance Check Related to the Fulfillment of the 
Transaction Requirements in Previous ABS Offerings

    In the 2010 ABS Proposing Release, we also proposed to require that 
in order to conduct a takedown off an effective shelf registration 
statement, an ABS issuer would be required to conduct an evaluation at 
the end of the fiscal quarter prior to the takedown of whether the ABS 
issuer was in compliance with the previously proposed registrant 
requirements relating to risk retention, third party opinions, the 
depositor's chief executive officer certification, and the undertaking 
to file ongoing reports.\104\ In response to our proposal, we received 
four comment letters that did not support the quarterly 
requirement.\105\ One commentator urged us to consider whether penalty 
options less severe than the loss of shelf eligibility for a year would 
be appropriate for a single violation but did not suggest specific 
alternatives.\106\ Another commentator suggested that shelf eligibility 
should be suspended only if the staff determines it is appropriate, and 
only a full year in egregious cases.\107\
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    \104\ In the 2010 ABS Proposing Release, we had proposed that in 
order to conduct a takedown off an effective shelf registration 
statement, an ABS issuer would be required to evaluate at the end of 
the fiscal quarter prior to the takedown whether, during the 
previous twelve months, the depositor and its affiliates had filed 
on a timely basis all of the certifications and transaction 
agreements required by the shelf eligibility transaction 
requirements of a previous offering. If they had not, then the 
depositor could not utilize the registration statement or file a new 
registration statement on Form SF-3 until one year after the 
required filings were filed. See 2010 ABS Proposing Release at 
23348.
    \105\ See letters from ASF, BOA, MBA and SIFMA on the 2010 ABS 
Proposing Release.
    \106\ See letter from MBA on the 2010 ABS Proposing Release.
    \107\ See letter from SIFMA on the 2010 ABS Proposing Release.
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    In light of the changes we are proposing to the transaction 
requirements to shelf eligibility described above, and taking into 
consideration the comments we received, we are revising and re-
proposing the registrant requirement to require an annual evaluation of 
compliance with the transaction requirements of shelf registration. 
Under the re-proposal, notwithstanding that the registration statement 
may have been previously declared effective, in order to conduct a 
takedown off an effective shelf registration statement, an ABS issuer 
would be required to evaluate, as of ninety days after the end of the 
depositor's fiscal year end, whether it continues to meet the 
registrant requirements, which would be the same as our 2010 ABS 
Proposal for Exchange Act reporting described above. In order to make 
the provision more workable and to simplify the evaluation for shelf 
compliance we are revising our proposal from a quarterly evaluation to 
an annual evaluation.\108\ Under the re-proposal, to the extent the 
depositor or any issuing entity previously established, directly or 
indirectly, by the depositor or any affiliate of the depositor, is or 
was at any time during the previous twelve months, required to comply 
with the proposed new transaction requirements related to the 
certification, credit risk manager and repurchase dispute resolution 
provisions, and investor communication provision, with respect to a 
previous offering of ABS involving the same asset class, such depositor 
and each issuing entity must have filed on a timely basis, at the 
required time for each takedown, all transaction agreements containing 
the provisions that are required by the proposed transaction 
requirements as well as all certifications.
---------------------------------------------------------------------------

    \108\ Although we are revising our proposal, we emphasize that 
failure to file the information required by the registrant 
requirements would be a violation of our rules, and subject to 
liability accordingly. Furthermore, failing to provide disclosure at 
the required time periods may raise serious questions about whether 
all required disclosure was provided to investors prior to investing 
in the securities.
---------------------------------------------------------------------------

    In response to commentators' concerns that the one-year penalty for 
missed transaction requirements was too extreme, we are revising and 
re-proposing to allow depositors and issuing entities to cure any 
failure to meet the transaction requirements, or failure to file the 
required certification or transaction agreements at the required time 
for purposes of ABS shelf eligibility. Under the re-proposal, a 
depositor and issuing entity could cure the deficiency if it 
subsequently files the information that was required and after a 
waiting period, it would be permitted to continue to use its shelf 
registration statement.\109\ Under the proposed cure mechanism, the 
depositor and issuing entity would be deemed to have met the registrant 
requirements, for purposes of this Form, 90 days after the date all 
required filings are filed.
---------------------------------------------------------------------------

    \109\ Curing the deficiency would also allow the depositor, or 
its affiliates to file a new registration statement, if it also 
meets the other registrant requirements. See proposed General 
Instruction I.A.1. to proposed Form SF-3.
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    For example, a depositor with a December 31 fiscal year end has an 
effective shelf registration statement. On March 30, it evaluates 
compliance with all registrant requirements under proposed Rule 401 (90 
days after the last fiscal year end) and determines that it is in 
compliance. The depositor then offers ABS and does not timely file the 
required transaction agreements required to be filed on June 20. The 
depositor would be able to continue to use its existing shelf until it 
is required to perform the annual evaluation required by proposed Rule 
401(g), on March 30 of the following year. After March 30 of Year 2 and 
until June 20 of Year 2, the depositor would not be able to offer ABS 
off of the shelf registration statement. Further, the depositor or its 
affiliates would not be permitted to file a new shelf registration 
statement after the missed filing on June 20, Year 1 because they could 
not meet the registrant requirement of timely filing of the transaction 
agreements containing the provisions required for any shelf offering 
for the prior twelve months. But, if the depositor had cured the 
defect, for example, on July 1 of Year 1, under the proposal, a new 
registration statement could be filed 90 days after July 1 of Year 1 
(or September 29 of Year 1), instead of waiting until June 20 of Year 2 
(when it otherwise would meet the twelve month timely filing 
requirement). Further, at the time of the next annual evaluation for 
the old shelf (noted above as March 30 of Year 2), the depositor would 
be deemed to have met the registrant requirements after 90 days after 
it had cured the defect on July 1 of Year 1, and the depositor could 
continue to use its old shelf registration statement (instead of 
waiting until June 20 of Year 2, as noted above).
    Our approach is an attempt to strike a balance between encouraging 
issuers' compliance with the proposed shelf transaction requirements 
and commentator's concerns that the one-year penalty period was too 
long.
Requests for Comment
    55. Should we add, as proposed, registrant requirements that would 
require, as a condition to form eligibility, affiliated issuers of the 
depositor that had offered securities of the same asset class that were 
registered on Form SF-3 to have complied with the certification, credit 
risk manager review and repurchase dispute resolution eligibility and 
investor communication conditions that replace the investment grade 
ratings

[[Page 47963]]

requirement? Will these requirements lead to better compliance by ABS 
issuers with the new shelf eligibility conditions that we are 
proposing? If not, what other mechanisms can we use to ensure 
compliance?
    56. Is it appropriate to require, as proposed, that the 
certifications and the transaction agreement(s) containing the credit 
risk manager and repurchase dispute provisions and investor 
communication provision be required to be filed pursuant to our 
proposed shelf eligibility conditions and also filed on a timely basis?
    57. Should we revise Rule 401, as proposed, to require that as a 
condition to continued use of an existing shelf registration statement 
for takedowns, an issuer conduct a periodic evaluation of form 
eligibility? If not, how should we approach the updating issue since 
ABS issuers are not required to file amendments for purposes of Section 
10(a)(3)?
    58. Should we require that the annual evaluation of all the 
registrant requirements of affiliated issuers have been filed on a 
timely basis be made as of the 90 days after the depositor's fiscal 
year, as proposed? Should the evaluation be made on a different 
timeframe, such as the last day of the most recent fiscal quarter, 
consistent with our previous proposals?
    59. Should we include, as proposed, an ability to cure an issuer's 
non-timely filing of the certification and agreements containing the 
credit risk manager review and repurchase dispute resolution and 
investor communication provisions? Should we require issuers to wait 90 
days after curing the defect, as proposed, to be deemed to meet the 
registrant requirements? Should the period be shorter (e.g., 30 or 45 
days) or longer (e.g., 180 or 270 days)?

60. Should we require additional requirements for evaluating compliance 
with registrant requirements, or an additional penalty for non-
compliance with the registrant requirements?
4. General Requests for Comment on Shelf Eligibility
    We request comment on our proposals for shelf-eligibility for 
asset-backed securities.
    61. Are all of the proposed shelf eligibility conditions necessary? 
Would one condition or a combination of fewer conditions be sufficient? 
As noted above, the 2010 ABS Proposals included risk retention and 
continued Exchange Act reporting as two of the four proposed 
requirements for shelf eligibility. In light of the fact that the Risk 
Retention proposals will apply to both registered and unregistered 
transactions, and ABS issuers with Exchange Act reporting obligations 
will continue to report without regard to shelf eligibility 
requirements, should we require the proposed requirements for shelf 
eligibility discussed above? Put another way, are risk retention and 
continued Exchange Act reporting together, sufficient replacements for 
the investment grade rating condition to eligibility for shelf 
offerings, so that no other conditions are necessary or appropriate?
    62. We are also considering whether an additional or alternative 
shelf eligibility condition based on previous offerings should be 
included in our final rules. In this regard, would an ABS issuer having 
sufficient experience in the ABS market be an appropriate criterion for 
shelf registration? For example, would an additional or alternative 
shelf eligibility condition that would restrict shelf eligibility to 
depositors with a history of similar prior ABS issuances (e.g., a 
requirement based on the number of past ABS transactions within the 
same asset class and similar structure within a specified period of 
time) be appropriate? What would be the economic impact of such a shelf 
eligibility condition? Should such a shelf eligibility condition 
require the registrant and its affiliates, as of a date within 60 days 
prior to the filing of the registration statement, to have engaged in 
at least three primary offerings of asset-backed securities in the last 
three years, provided the following criteria are met: (i) At least one 
of the previous offerings was registered under the Securities Act of 
1933; (ii) the asset-backed securities issued in the previous offerings 
are of the same asset class as the asset-backed securities registered 
on the registration statement; and (iii) the structures of the 
transactions of the previous offerings are similar to the structure of 
each transaction registered on the registration statement. If so, 
should the requirement be an additional shelf eligibility condition, or 
should it replace one or more of the proposed conditions? Are the 
criteria described above appropriate? In particular, should we use a 
different measurement period than the 60 days prior to filing? Would a 
three year look-back time period be appropriate, or should it be less 
time (such as 2 years) or more time (such as 4 years)? What should be 
the required minimum number of transactions? Should all the 
transactions used for measuring be required to have been registered 
under the Securities Act? Are the requirements related to the same 
asset class and similar structure appropriate? Do we need to provide 
guidance on what is a similar structure, and if so, what kind of 
guidance? If private or offshore offerings are permitted to count for 
purposes of this possible shelf eligibility condition, should we 
require disclosure in the registration statement of these transactions 
for the purpose of monitoring compliance with the shelf eligibility 
condition? If so, what disclosure should be required? In order to 
prevent parties that may otherwise fail this shelf eligibility 
condition from simply using the registration statement of an 
unaffiliated eligible depositor (e.g., rent-a-shelf transactions), 
should the condition also require the registrant to be affiliated with 
a sponsor and depositor in each of the previous transactions as well as 
affiliated with a sponsor and depositor in the offerings conducted off 
the shelf registration statement? Commentators are requested to provide 
empirical data and other factual support for their views, if possible.
    63. Asset-backed issuers may rely on the exclusion from the 
definition of investment company in Section 3(c)(5) of the Investment 
Company Act rather than on Rule 3a-7 under the Investment Company 
Act.\110\ Section 3(c)(5) was intended to exclude from the definition 
of investment company certain factoring, discounting and mortgage 
companies. However, Rule 3a-7 contains substantive conditions designed 
to address, among other things, conflicts of interest concerning ABS 
and Section 3(c)(5) does not contain the same substantive conditions. 
Would it be appropriate to require, as an additional transaction 
requirement for ABS shelf eligibility, that the ABS issuer of the 
transaction meet the requirements of Rule 3a-7? We note that the 
practical effect of such a requirement would be that transactions 
excluded from the definition of

[[Page 47964]]

investment company under Section 3(c)(5) of the Investment Company Act 
would not be eligible for shelf registration unless they satisfy Rule 
3a-7. Would restricting shelf eligibility to those issuers that meet 
the requirements of Rule 3a-7 give equal access to shelf for all 
issuers of ABS across asset classes? Should we require disclosure of 
the basis for the exclusion from the definition of investment company 
in the prospectus?
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    \110\ Section 3(c)(5) of the Investment Company Act excludes 
from the definition of investment company any person who is not 
engaged in the business of issuing redeemable securities, face-
amount certificates of the installment type or periodic payment plan 
certificates, and who is primarily engaged in one or more of the 
following businesses: (A) Purchasing or otherwise acquiring notes, 
drafts, acceptances, open accounts receivable, and other obligations 
representing part or all of the sales price of merchandise, 
insurance and services; (B) making loans to manufacturers, 
wholesalers and retailers of, and to prospective purchasers of, 
specified merchandise, insurance, and services and (C) purchasing or 
otherwise acquiring mortgages and other liens on and interests in 
real estate. Certain asset-backed issuers, including those that 
securitize retail automobile installment contracts, credit card 
receivables, trade receivables, boat loans or equipment leases, have 
sought to rely on the provisions of Section 3(c)(5)(A) or (B).
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III. Disclosure Requirements

A. Exhibits To Be Filed With Rule 424(h) Filing

    We are proposing to require ABS issuers to file copies of the 
underlying transaction agreements, including all attached schedules, 
and other agreements that are referenced (such as those containing 
representations and warranties regarding the underlying assets), at the 
same time as a preliminary prospectus that would be required under 
proposed Rule 424(h).\111\
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    \111\ See Section II. above and fn. 19. See also the 2010 ABS 
Proposing Release at 23335.
---------------------------------------------------------------------------

    In the 2010 ABS Proposing Release, we proposed to revise the filing 
deadlines in shelf offerings to provide investors with additional time 
to analyze transaction-specific information prior to making an 
investment decision. Under the proposed ABS shelf procedures, an ABS 
issuer would be required to file a preliminary prospectus with the 
Commission for each takedown off of the proposed new shelf registration 
form for ABS (Form SF-3) at least five business days prior to the first 
sale in the offering.\112\ We proposed to require that such information 
be filed at least five business days before the first sale of 
securities in the offering in an effort to balance the interest of ABS 
issuers in quick access to the capital markets and the need of 
investors to have more time to consider transaction-specific 
information. Given many ABS investors' stated desire for more time to 
consider the transaction and for more detailed information regarding 
the pool assets, the proposed new filing deadlines were designed to 
promote independent analysis of ABS by investors rather than reliance 
on credit ratings. While commentators generally either supported \113\ 
or did not object to this proposed approach, some commentators asked 
that we shorten the five-day period. For example, several commentators 
generally suggested the period be reduced to two days.\114\ We have not 
reached a conclusion on that aspect of the proposal and it remains 
outstanding.
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    \112\ We proposed new Rule 430D to provide the framework for 
shelf registration of ABS offerings and related Rule 424(h) filing 
requirements for a preliminary prospectus. Under proposed Rule 430D, 
the Rule 424(h) preliminary prospectus must contain substantially 
all the information for the specific ABS takedown previously omitted 
from the prospectus filed as part of an effective registration 
statement, except for pricing information. See the 2010 ABS 
Proposing Release at 23335.
    \113\ See letters from AMI; California Public Employees' 
Retirement System (CalPERS); CREFC; Rylee Houseknecht; Jamie L. 
Larson; Investment Company Institute (ICI); AFL-CIO; CFA Institute; 
Metlife; Prudential and Realpoint on the 2010 ABS Proposing Release.
    \114\ See letters from ABA; AmeriCredit; ASF; BOA; CNH; 
Vanguard; Vehicle ABS Group; and Wells Fargo on the 2010 ABS 
Proposing Release.
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    Related to the proposal to require the preliminary prospectus be 
made available in time to facilitate independent analysis by investors, 
commentators on the 2010 ABS Proposal requested that investors also 
have access to copies of the underlying agreements on a more timely 
basis given the importance of the final documents to an investor's 
understanding of the actual contractual provisions.\115\ In the staff's 
experience with the filing of these documents, ABS issuers have delayed 
filing such material agreements with the Commission until several days 
or even weeks after the offering of securities off of a shelf 
registration statement, even though these transaction agreements and 
other documents provide important information regarding the terms of 
the transactions, representations and warranties about the assets, 
servicing terms, and many other rights that would be material to an 
investor.\116\ In light of these concerns, we had proposed to amend 
Item 1100(f) of Regulation AB \117\ to clarify the existing exhibit 
filing requirements by making explicit that the exhibits filed with 
respect to an ABS offering, registered on proposed Form SF-3, must be 
on file and made part of the registration statement at the latest by 
the date the final prospectus is required to be filed pursuant to Rule 
424.\118\
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    \115\ See letter from CMBS investors on the 2010 ABS Proposing 
Release (suggesting that the rules require that key disclosures, 
including the pooling and servicing agreement, be made available to 
investors during the marketing period so that investors have 
adequate time to review prior to making an investment decision). See 
also letter from Prudential on the 2010 ABS Proposing Release 
(stating that last minute financial engineering may occur, thereby 
contributing to poor understanding, and in some instances, 
misunderstanding of the transaction).
    \116\ In the 2004 ABS Adopting Release we stated that consistent 
with Item 601 of Regulation S-K, governing documents and material 
agreements for an ABS offering such as the pooling and servicing 
agreement, the indenture and related documents must be filed as an 
exhibit.
    \117\ Item 1100(f) of Regulation AB allows ABS issuers to file 
agreements or other documents as exhibits on Form 8-K and, in the 
case of offerings on Form S-3, incorporate the exhibits by reference 
instead of filing a post-effective amendment.
    \118\ We stated in the 2010 ABS Proposing Release that ABS shelf 
offerings were designed to mirror non-shelf offerings in terms of 
filing exhibits and final prospectuses. We also noted that the 
filing requirements for Form S-3 are consistent with Form S-1 
because all exhibits to Form S-1 must be filed by the time of 
effectiveness. See 2010 ABS Proposing Release at 23388.
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    As noted above, commentators urged that we should ensure that the 
exhibits be available for investor review prior to making an investment 
decision.\119\ In light of these concerns, we are re-proposing Item 
1100(f) of Regulation AB to also require that the underlying 
transaction documents, in substantially final form, be filed and made 
part of the registration statement by the date the Rule 424(h) 
prospectus is required to be filed. This requirement, if adopted, would 
allow investors additional time to analyze the actual underlying 
agreements containing the specific structure, assets, and contractual 
rights regarding each transaction. If the exhibits filed with the Rule 
424(h) prospectus remain unchanged at the time final prospectus under 
Rule 424(b) is required to be filed, then an issuer would not be 
required to re-file the same exhibits.\120\
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    \119\ See fn. 116.
    \120\ Under this proposal, any change to the agreement could 
only be minor. As we explained in the 2010 ABS Proposing Release, a 
material change in the information provided in the Rule 424(h) 
filing, other than offering price, would require a new Rule 424(h) 
filing. See the 2010 ABS Proposing Release at 23335. Finalized 
agreements at the time of the offering may be filed as provided by 
Instruction 1 to Item 601 of Regulation S-K. The filing requirement 
for an exhibit (other than opinions and consents) may be satisfied 
by filing the final form of the document to be used; the final form 
must be complete, except that prices, signatures and similar matters 
may be omitted. See Elimination of Certain Pricing Amendments and 
Revision of Prospectus Filing Procedures, Release No. 33-6714 (June 
5, 1987) [52 FR 21252]. We also note that filing of final agreements 
at the time the final prospectus is due will be after the time of 
sale of the security for purposes of Rule 159 and Securities Act 
Section 12(a)(2), and that information conveyed to the investor 
after the time of sale will not be taken into account for purposes 
of Section 12(a)(2) of the Securities Act. See Rule 159.
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Request for Comment
    64. Is our proposed amendment to Item 1100(f) appropriate? Is there 
any reason that exhibits, in substantially final form, could not be 
filed by the time the preliminary prospectus is required to be filed 
under proposed Rule 424(h)?
    65. Is it appropriate to require that exhibits be filed in 
``substantially final form'' at the time of filing the Rule 424(h) 
prospectus, as proposed? If we require something other than 
``substantially final form'' what information should we require, and 
what information may be omitted?

[[Page 47965]]

    66. Should we require the final form of the exhibits to be filed at 
the same time as the Rule 424(b) prospectus, if the exhibits have not 
changed since the 424(h) filing?
    67. One commentator also suggested that we require issuers provide 
investors with a copy of the representations, warranties, remedies and 
exceptions marked to show how it compares with model provisions 
developed by the Commercial Real Estate Finance Council (CREFC).\121\ 
Should we require that issuers file as an exhibit a copy of the 
representations, warranties, remedies and exceptions marked to show how 
it compares to an industry developed model provisions? If so, should we 
require that the industry developed model provisions be developed by an 
industry group whose membership includes issuers, investors, and other 
market participants? Do such model provisions exist for other asset 
classes? Should we require that the marked copy be filed at the same 
time as the Rule 424(h) prospectus? Should we require an updated marked 
copy be filed at the same time as the Rule 424(b) prospectus if they 
have not changed since the 424(h) filing?
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    \121\ See letter from CMBS investors on the 2010 ABS Proposing 
Release. CREFC is a trade organization for the commercial real 
estate finance industry.
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B. Requests for Comment on Asset-Level Information

1. Section 7(c) of the Securities Act
    Section 942(b) of the Act added Section 7(c) to the Securities Act 
requiring the Commission to adopt regulations requiring an issuer of an 
asset-backed security to disclose, for each tranche or class of 
security, information regarding the assets backing that security.\122\ 
It specifies that in adopting regulations, the Commission shall:
---------------------------------------------------------------------------

    \122\ See Section 7(c) of the Securities Act, as added by 
Section 942(b) of the Act.
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    (A) Set standards for the format of the data provided by issuers of 
an asset-backed security, which shall, to the extent feasible, 
facilitate the comparison of such data across securities in similar 
types of asset classes; and
    (B) Require issuers of asset-backed securities, at a minimum, to 
disclose asset-level or loan-level data, if such data are necessary for 
investors to independently perform due diligence including--
    (i) Data having unique identifiers relating to loan brokers and 
originators;
    (ii) The nature and extent of the compensation of the broker or 
originator of the assets backing the security; and
    (iii) The amount of risk retention by the originator and the 
securitizer of such assets.\123\
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    \123\ See Section 7(c)(2) of the Securities Act, as added by 
Section 942(b) of the Act.
---------------------------------------------------------------------------

    In the 2010 ABS Proposing Release, to augment our current 
principles-based pool-level disclosure requirements, we had proposed 
new requirements to disclose asset-level information in prospectuses 
and in periodic reports. We believe that our proposal for asset-level 
data for registered offerings, which remains outstanding, would 
implement the requirements of Section 7(c) because our proposal would 
set standards that would facilitate the comparison of data across asset 
classes, and within the same asset class. Further, our proposals 
require issuers to disclose asset-level data, which we believe are 
necessary for investors to independently perform due diligence.
    In the 2010 ABS Proposing Release, we explained that investors, 
market participants, policy makers and others have increasingly noted 
that asset-level information is essential to evaluating an asset-backed 
security.\124\ We proposed to require, with some exceptions, that 
prospectuses for public offerings of asset-backed securities and 
ongoing Exchange Act reports contain specified asset-level information 
about each of the assets in the pool.\125\ Because we believe that 
issuers should provide transparent and comparable data, we proposed to 
require asset-level information in a standardized format to be included 
in the prospectus and periodic reports and filed on EDGAR. Our proposal 
specifies and defines each item that must be disclosed for each asset 
in the pool and requires that the asset-level information be provided 
in a tagged data format using Extensible Markup Language (XML) in order 
to facilitate data analysis, consistent with the requirements of 
Section 7(c).\126\
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    \124\ See the 2010 ABS Proposing Release at 23355.
    \125\ We proposed that all asset classes, except for stranded 
cost and credit cards issuers, provide asset-level data. For credit 
card and charge card ABS, we proposed that issuers be required to 
provide grouped account data. See 2010 ABS Proposing Release at 
23355.
    \126\ By proposing to require the asset-level data file in XML, 
a machine-readable language, we anticipate that users of the data 
will be able to download the disclosure directly into spreadsheets 
and databases, analyze it using commercial off-the-shelf software, 
or use it within their own models in other software formats. As we 
explained in the 2010 ABS Proposing Release, XML is an open standard 
that defines or ``tags'' data using standard definitions. The term 
``open standard'' is generally applied to technological 
specifications that are widely available to the public, royalty-
free, at minimal or no cost. The tags establish a consistent 
structure of identity and context. This consistent structure can be 
recognized and processed by a variety of different software 
applications. In the case of XML, software applications, such as 
databases, financial reporting systems, and spreadsheets recognize 
and process tagged information. Some issuers already file loan 
schedules on EDGAR as part of the pooling and servicing exhibit or a 
free writing prospectus. However, the data is currently filed on 
EDGAR in ASCII or HTML, both of which do not facilitate data 
analysis. See the 2010 ABS Proposing Release at 23374.
---------------------------------------------------------------------------

    Section 7(c) also requires that we require issuers of asset-backed 
securities, at a minimum, to disclose asset-level or loan-level data, 
if such data are necessary for investors to independently perform due 
diligence, including data having unique identifiers relating to loan 
brokers and originators. The 2010 ABS Proposal would require disclosure 
of the name of the originator of an asset for all asset classes.\127\ 
If the asset is a residential mortgage, and a MERS number for the 
originator is available, we proposed to require that the MERS number 
for the originator be provided.\128\
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    \127\ See proposed Item 1(a)(4) of Schedule L of Regulation AB 
in the 2010 ABS Proposing Release.
    \128\ Mortgage Electronic Registration Systems, Inc. (MERS) is 
affiliated with the Mortgage Industry Standards Maintenance 
Organization (MISMO), a not-for profit subsidiary of the Mortgage 
Bankers Association. MERS has developed a unique numbering system 
and reporting packages to capture and report data at different times 
during the life of the underlying residential or commercial loan.
---------------------------------------------------------------------------

    In addition, for residential mortgages only, we proposed that 
issuers be required to disclose unique identifiers related to loan 
originators and company, as required by the Secure and Fair Enforcement 
for Mortgage Licensing Act of 2008, otherwise known as the NMLS 
numbers.\129\ We note that the NMLS numbers for ``originator'' and 
company refer to the individual and company taking the loan 
application, which would include loan brokers and the company that the 
broker works for.\130\

[[Page 47966]]

Therefore, we believe that our proposal to require NMLS numbers would 
implement the requirements of Section 7(c) with respect to mortgages by 
requiring a unique numerical identifier for a loan broker.
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    \129\ See proposed Items 2(a)(11) and (12) of Schedule L of 
Regulation AB in the 2010 ABS Proposing Release. In 2008, Congress 
passed The Secure and Fair Enforcement for Mortgage Licensing Act of 
2008 (the ``SAFE Act'') which required the creation of a Nationwide 
Mortgage Licensing System and Registry and unique identifiers for 
loan originators and company (NMLS numbers). The SAFE Act is 
designed to enhance consumer protection and reduce fraud by 
encouraging states to establish minimum standards for the licensing 
and registration of state-licensed mortgage loan originators and for 
the Conference of State Bank Supervisors (CSBS) and the American 
Association of Residential Mortgage Regulators (AARMR) to establish 
and maintain a nationwide mortgage licensing system and registry for 
the residential mortgage industry. The SAFE Act was enacted as part 
of the Housing and Economic Recovery Act of 2008, Public Law 110-
289, Division A, Title V, sections 1501-1517, 122 Stat. 2654, 2810-
2824 (July 30, 2008), codified at 12 U.S.C. 5101-5116.
    \130\ In contrast, note that for purposes of Regulation AB, we 
have generally interpreted an originator to be the person or entity 
that extends the credit to the borrower. See the 2004 Adopting 
Release at 1538.
---------------------------------------------------------------------------

    We are unaware of any standardized unique identifying system used 
for the purpose of identifying brokers or originators of other asset 
classes, across all asset classes or within an asset class.\131\ 
Further, we believe that asset classes, other than RMBS and CMBS, do 
not typically use brokers to originate loans; however we request 
comment on whether brokers are used in other asset classes. We are also 
requesting comment on whether unique identifiers for loan brokers and 
originators exist for other asset classes (or a system of unique 
identifiers could reasonably be established), and if so, whether the 
data is necessary to independently perform due diligence for other 
asset classes.
---------------------------------------------------------------------------

    \131\ See also Joint Study on the Feasibility of Mandating 
Algorithmic Descriptions for Derivatives (April 7, 2011), available 
at http://www.sec.gov/news/studies/2011/719b-study.pdf (also 
concluding that before mandating the use of standardized 
descriptions for all derivatives a universal entity identifier and 
product or instrument identifiers, among other things, are needed).
---------------------------------------------------------------------------

    Section 7(c) also requires that we require issuers to disclose 
asset-level data on the nature and extent of the compensation of the 
broker or originator of the assets backing the security, if such data 
are necessary for investors to independently perform due diligence. The 
2010 ABS Proposals did not include requirements to provide asset-level 
data regarding fees to brokers or originators. However, with respect to 
RMBS, our proposal did include an asset-level disclosure requirement to 
indicate whether a broker originated a loan.\132\ In addition, 
disclosure of the origination channel for each loan is also required 
under the 2010 ABS Proposals (i.e., was the loan originated through a 
bank's own retail operation, a broker, a correspondent lender, 
etc.).\133\ We are not proposing asset-level disclosure requirements 
for broker's compensation at this time because we believe that the 
proposed data points may provide the information necessary to perform 
due diligence on an RMBS pool with respect to broker involvement 
because investors can analyze the method in which a loan was 
underwritten based on these data points. We request comment on whether 
the specific compensation paid to brokers or originators would be 
useful in performing due diligence for RMBS and for other asset classes 
and should be required under our final rules. In light of the fact that 
compensation may be paid in many different forms and calculated in 
different ways we are requesting comment about the forms of 
compensation. We also request comment on how to define these data 
points so that the information provided is standardized and comparable 
across asset classes or within an asset class.
---------------------------------------------------------------------------

    \132\ See proposed Item 2(a)(9) of Schedule L of Regulation AB 
in the 2010 ABS Proposing Release.
    \133\ See proposed Item 2(a)(10) of Schedule L of Regulation AB 
in the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    In addition, Section 7(c) requires that we require issuers to 
disclose asset-level data related to the amount of risk retention by 
the originator and securitizer of such assets, if such data are 
necessary for investors to independently perform due diligence. The 
2010 ABS Proposals include a requirement to disclose any interest the 
sponsor has retained in the transaction, including the amount and 
nature of that interest.\134\ Also, as discussed above, the joint 
regulators proposed risk retention requirements as required by Section 
15G of the Exchange Act and that proposal also includes disclosure 
requirements concerning the risk retention option selected.\135\ The 
outstanding Risk Retention Proposals do not require originators to 
retain risk in individual assets of the pool.\136\ In light of the 
outstanding Risk Retention Proposals and 2010 ABS Proposal for sponsor 
risk retention disclosure, at this time we are not proposing additional 
disclosure requirements but we are requesting comment on whether risk 
retention disclosure on an asset-level basis is necessary for investors 
to independently perform due diligence.
---------------------------------------------------------------------------

    \134\ See proposed Item 1104(e) of Regulation AB in the 2010 ABS 
Proposing Release.
    \135\ See fn. 12.
    \136\ See the Risk Retention Proposing Release at 24114.
---------------------------------------------------------------------------

Requests for Comment
    68. Do the 2010 ABS Proposals implement Section 7(c) effectively? 
Are there any changes or additions that would better implement Section 
7(c)?
    69. Is the proposed XML format an adequate standard for the format 
of data that, to the extent feasible, facilitates the comparison of 
data across securities in similar types of asset classes? If not, how 
could it be improved?
    70. Are unique identifiers for loan brokers and/or originators 
necessary to permit investors to independently perform due diligence 
for asset classes other than RMBS or CMBS? If so, is there a unique 
system of identifiers for brokers and originators for other asset 
classes?
    71. Do asset classes other than RMBS or CMBS use brokers?
    72. Would it be appropriate to require an originator's tax ID 
number, RSSD ID number, FDIC Certificate Number or Routing Transit 
Number (RTN) as a unique identifier? \137\ Would any of these 
identifiers be an appropriate unique identifier across asset classes? 
Do originators have multiple tax ID numbers, RSSD IDs, FDIC Certificate 
Numbers, or RTNs? If so, how should we specify which one to use? With 
respect to tax ID numbers, should we specify that social security 
numbers should not be provided? Are there any other existing unique 
identifiers that would be appropriate for these purposes? Should new 
identification systems be developed? If so, by whom?
---------------------------------------------------------------------------

    \137\ A tax ID number is a unique number assigned by the 
Internal Revenue Service. An RSSD ID is a unique identifying number 
assigned by the Federal Reserve for all financial institutions, main 
offices, as well as branches. An FDIC Certification Number is a 
unique number assigned by the FDIC used to identify institutions and 
to issue insurance certificates. An RTN, or a routing transit 
number, is a nine-digit unique bank identifier originally designed 
by the American Bankers Association.
---------------------------------------------------------------------------

    73. Is asset-level disclosure related to the nature and extent of 
the compensation of the broker or originator necessary to independently 
perform due diligence across all asset classes?
    74. How are the brokers and originators compensated? Should we 
require the fee to be expressed as a dollar amount, a percentage or 
both? If percentage, what should be the basis for calculating the 
percentage? Is it appropriate for RMBS or CMBS only? Any other asset 
classes?
    75. How should the asset-level data points for broker or originator 
compensation be defined so that the information provided will be 
standardized and comparable across asset classes or within an asset 
class?
    76. Is it more useful if the broker or originator compensation 
disclosure is provided in a format other than at the asset-level? \138\ 
Could it be provided in

[[Page 47967]]

the prospectus in narrative form or some other tabular format?
---------------------------------------------------------------------------

    \138\ The Federal Deposit Insurance Corporation (``FDIC'') 
recently amended its ``safe harbor'' rule from the FDIC's statutory 
authority to disaffirm or repudiate contracts of an insured 
depository institution (``IDI'') with respect to transfers of 
financial assets by an IDI in connection with a securitization or a 
participation (the ``FDIC Safe Harbor Rule''). Under the FDIC Safe 
Harbor Rule the securitization documents must require disclosure to 
investors of the nature and amount of compensation paid to any 
mortgage or other broker, noting that this disclosure should enable 
investors to assess potential conflicts of interests and how the 
compensation structure affects the quality of the assets securitized 
or the securitization as a whole. We note, however, that the FDIC 
Safe Harbor Rule requires disclosure of compensation for RMBS only. 
See Federal Deposit Insurance Corporation, Treatment by the Federal 
Deposit Insurance Corporation as Conservator or Receiver of 
Financial Assets Transferred by an Insured Depository Institution in 
Connection With a Securitization or Participation After September 
30, 2010 (Sep. 27, 2010) [70 FR 60287].
---------------------------------------------------------------------------

    77. Is the amount of risk retention, on an asset-level basis, 
necessary to independently perform due diligence? If so, how should we 
require it be calculated in light of the outstanding Risk Retention 
Proposal requiring risk retention in the securities and not the asset? 
Should we require the amount of risk retention be expressed as a dollar 
amount, a percentage or both? If percentage, what should be the basis 
for calculating the percentage?
    78. Is it more useful to provide disclosure regarding risk 
retention in a format other than asset-level? Could it be provided in 
the prospectus in a narrative form or some other tabular format? Is the 
2010 ABS Proposal to require disclosure of any interest the sponsor has 
retained in the transaction, sufficient to address the purpose of the 
asset-level risk retention disclosure requirements in Section 7(c)?
    79. In light of the joint Risk Retention Proposals, and the 
servicing standards included in the proposal, we are requesting comment 
on whether additional data points related to loss mitigation and RMBS 
should be required.\139\ In the case of borrower default, most pooling 
and servicing agreements require a servicer, among other things, to 
take loss mitigation actions in the event the net present value (NPV) 
of loss mitigation exceeds the estimated NPV of recovery through 
foreclosure. Should the estimated NPV in both cases be required to be 
disclosed as an asset-level data point? Should the method of 
calculation be required to be disclosed as an asset-level data point? 
Are there standard methods of calculating NPV? Are the formulas for 
calculating NPV included in the underlying transaction agreements? If 
not, who determines the method used and should that method be required 
to be disclosed? Should the assumptions used be required to be 
disclosed? If not, how can an investor evaluate the NPV? Is it 
appropriate to require disclosure of the method of calculation and 
assumptions on an asset-level with Schedule L? Or is it more 
appropriate to require the disclosure in some other form, such as in 
narrative form within a periodic report on Form 10-D or Form 8-K?
---------------------------------------------------------------------------

    \139\ See the Risk Retention Proposing Release at 24127.
---------------------------------------------------------------------------

    80. Also related to loss mitigation, should we require additional 
data points related to compensation paid to servicers related to an 
individual loan? The 2010 ABS Proposals included certain asset-level 
data point requirements related to fees earned by the servicer (e.g., 
servicing fees claimed and performance incentive fees).\140\ Are there 
other ways that servicers are compensated with respect to loss 
mitigation? Are there any fees that servicers or their affiliates may 
earn related to loss mitigation of a particular asset? Are there any 
fees paid to any other parties related to loss mitigation of a 
particular asset? If so, should we require disclosure of those fees, 
even if the fees are not paid directly through the issuing entity? 
Should that disclosure be provided on Schedule L-D, or within the Form 
10-D in a narrative form, or both? Would it be appropriate to require 
this type of disclosure across asset classes? Or should it only be 
required for certain asset classes, such as RMBS and CMBS?
---------------------------------------------------------------------------

    \140\ See proposed Item 2(m)(1)(iii) and Item 2(m)(1)(xvi) of 
Schedule L-D for RMBS in the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    As we noted in the 2010 ABS Proposing Release, we are sensitive to 
the possibility that certain asset-level disclosure may raise concerns 
about the personal privacy of the underlying obligors. In particular, 
we noted that data points requiring disclosure about the geographic 
location of the obligor or the collateralized property, credit scores, 
income and debt may raise privacy concerns. However, information about 
credit scores, employment status and income would permit investors to 
perform better credit analysis of the underlying assets. In light of 
privacy concerns, instead of requiring issuers to disclose a specific 
location, credit score, or exact income and debt amounts, we proposed 
ranges, or categories of coded responses.\141\ Several commentators 
noted that our asset-level requirements, as proposed, would still raise 
privacy concerns.\142\ Those commentators were generally concerned that 
asset-level disclosures, despite our attempts to require that certain 
information be provided in ranges (instead of exact amounts), would not 
mitigate the possibility that information, including ``personally 
identifiable financial information'' or information that would 
constitute a ``consumer report'' \143\ could be linked to an obligor on 
an underlying asset.\144\ On the other hand, several commentators 
suggested that asset-level data should be required, and some 
commentators specifically noted that exact data points, instead of 
ranges, are needed to evaluate risk and appropriately price the 
securities.\145\ In light of comment letters received and the 
requirements of new Section 7(c) of the Securities Act, we are 
soliciting additional comment on privacy concerns raised by the 
proposed asset-level disclosure requirements.
---------------------------------------------------------------------------

    \141\ For instance, instead of exact zip code, we proposed that 
issuers provide an MSA code, a regional geographic locator. For 
asset-level disclosure data points that require disclosure of 
obligor credit scores, we proposed coded responses that represent 
ranges of credit scores (e.g., 500-549, 550-599, etc.). The ranges 
were based on the ranges that some issuers already provide in pool-
level disclosure. For monthly income and debt ranges, we developed 
the ranges based on a review of statistical reporting by other 
governmental agencies (e.g., $1,000-$1,499, $1500-$1,999, etc.). See 
2010 ABS Proposing Release at 23357.
    \142\ See, e.g., letters from ABA, Consumers Union, MBA, Vehicle 
ABS Group, and World Privacy Forum.
    \143\ Personally identifiable financial information generally 
means any information: that a consumer provides to obtain a 
financial product or service; about a consumer resulting from any 
transaction involving a financial product or service; or is 
otherwise obtained about a consumer in connection with providing a 
financial product or service to that consumer. See Rule 3(u)(1) of 
Regulation S-P [17 CFR 248.3(u)(1)]. A consumer report, as defined 
in the Fair Credit Reporting Act, in general means any information 
about a consumer bearing on his/her credit or other personal 
characteristics which will be used to establish a consumer's 
eligibility for credit, employment and other authorized purposes 
under the statute. [15 U.S.C. 1681a].
    \144\ Commentators were also concerned that it may be possible 
to identify an individual obligor by matching asset-level data about 
the underlying property or asset with data available through other 
public or private sources about assets and their owners (a process 
known as ``reverse engineering''). If an obligor was identified, 
then the obligor's non-public personal financial status would be 
discoverable. See, e.g., letter from ABA on the 2010 ABS Proposing 
Release (explaining concerns related to the goals of the Gramm-
Leach-Bliley Act to limit disclosure of personal financial 
information for marketing purposes without giving individuals an 
opportunity to opt out of the use of such information).
    \145\ See letters on the 2010 ABS Release from ASF (requesting 
disclosure of exact credit score and noting that requiring ranges 
would be a step back in terms of transparency), Interactive Data 
(noting that asset-level granularity is essential for robust 
evaluation of loss, default and prepayment risk associated with 
RMBS); Prudential (suggesting that ranges of FICO score bands are 
not sufficient to appreciate the linkages between collateral 
characteristics); and Wells Fargo (expressing concern that 
restricting information available to investors could result in 
substantially lower pricing for new RMBS offerings).
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Request for Comment
    81. How should we require asset-level data, both initially and on 
an ongoing basis, to implement Section 7(c) effectively, yet also 
address commentators' privacy concerns?
    82. What particular data elements could be revised or eliminated 
for each particular asset class in order to address commentator's 
privacy concerns, yet still enable an investor to independently perform 
due diligence? For instance, if we do not require information about an 
obligor's credit score and income, while still requiring the other 
proposed asset data points, are concerns about obligor privacy 
alleviated while also

[[Page 47968]]

implementing the requirements of Section 7(c)?
    83. Would it be appropriate to require an obligor's credit score 
and income be provided on a grouped basis in a format similar to our 
credit card proposal in the 2010 ABS Proposing Release,\146\ in 
addition to requiring all of the other proposed asset-level data points 
with the prospectus? What would be appropriate groupings (i.e., should 
the columns or ranges be different than our credit card proposal)? 
Would that approach alleviate privacy concerns and also implement the 
requirements of Section 7(c)?
---------------------------------------------------------------------------

    \146\ The 2010 ABS Proposals proposed that issuers of ABS backed 
by credit cards provide disclosure more granular than pool-level 
disclosure by creating ``grouped account data.'' As we explain the 
2010 ABS Proposing Release, grouped account data would be created by 
compressing the underlying asset-level data into combinations of 
standardized distributional groups using asset-level characteristics 
and providing specified data about these groups. Like the asset-
level data proposals, the grouped account data would be provided in 
XML to facilitate data analysis. See the 2010 ABS Proposing Release 
at 23372.
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    84. Would any of these approaches be appropriate for RMBS, as well 
as other asset classes?
    85. Are there other ways to present data that is useful to 
investors but helps to address privacy concerns? How else can we 
implement Section 7(c) and also address commentators' privacy concerns 
related to asset-level reporting?
2. Additional Requests for Comment on Asset-Level Data
    As discussed above, in the 2010 ABS Proposing Release, we proposed 
to require asset-level disclosures for ABS backed by residential 
mortgages; commercial mortgages; automobile loans or leases; equipment 
loans or leases; student loans; floorplan financings; corporate debt; 
and resecuritizations. For ABS backed by credit and charge card 
receivables we proposed requiring disclosure of grouped account data in 
lieu of asset-level data. We received many helpful and detailed 
suggestions regarding many of the proposed asset data points. We 
received a mixed response to our proposal, with some commentators 
supporting asset-level disclosure across asset classes and some 
commentators suggesting that asset-level data would not be appropriate. 
For several asset classes we received various recommendations for 
either grouped account disclosures or grouped account and pool-level 
disclosures in lieu of asset-level disclosures.\147\ Some of the 
letters included detailed suggestions for group data. We will consider 
these letters along with all the letters on the original proposal. We 
have at this time made no determination regarding the final rules for 
any asset class. However for two discrete asset classes, namely 
Equipment ABS \148\ and Equipment Floorplan ABS,\149\ we are requesting 
more information on possible data points.
---------------------------------------------------------------------------

    \147\ See, e.g., letters on the 2010 ABS Proposing Release from 
ASF's auto ABS issuer members and certain investor members 
(submitting a recommendation for grouped account and pool-level 
disclosures for ABS backed by auto loans and leases); ASF issuer and 
investor members (submitting a recommendation for grouped account 
disclosures for auto floorplan ABS); Sallie Mae (submitting an 
``aggregated and grouped representative line'' proposal for ABS 
backed by student loans).
    \148\ For purposes of this discussion, we refer to ABS backed by 
equipment loans and leases as ``Equipment ABS.''
    \149\ For purposes of this discussion, we refer to ABS backed by 
equipment floorplan financings as ``Equipment Floorplan ABS.''
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    For Equipment ABS, our proposal to require asset-level disclosure, 
like other asset classes, received a mixed response from commentators. 
Some commentators supported asset-level data for Equipment ABS, while 
others suggested that asset-level data was not appropriate.\150\ The 
Captive Equipment ABS Issuer Group, CNH, ELFA and Navistar each 
suggested that asset-level data would create privacy issues, risk 
dissemination of competitively sensitive information and increase 
costs. The Captive Equipment ABS Issuer Group, CNH and ELFA also 
suggested that asset-level data goes beyond what investors need or 
require for Equipment ABS. Some commentators individually recommended 
that Equipment ABS issuers should be permitted to present grouped 
account disclosure similar to what we proposed for credit and charge 
card issuers. CNH and Navistar also suggested that some of the proposed 
asset-level data points are inapplicable to Equipment ABS.
---------------------------------------------------------------------------

    \150\ See, e.g., letters on the 2010 ABS Proposing Release from 
MetLife and SIFMA (investors) (each letter suggesting support for 
asset-level disclosures and revisions to the Commission's asset-
level proposal for Equipment ABS); CalPers (expressing general 
support for asset-level disclosures for Equipment ABS). But see 
letters on the 2010 ABS Release from CNH, Navistar Financial 
Corporation (Navistar) and Equipment Leasing and Financing 
Association (ELFA) and from a group of five captive equipment ABS 
issuers (Captive Equipment ABS Issuer Group) (each suggesting that 
asset-level data was not appropriate for Equipment ABS).
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    We appreciate that Equipment ABS may share some characteristics 
with other asset classes for which commentators have suggested grouped 
account data may be appropriate. For example, commentators for the Auto 
ABS asset class \151\ suggested grouped data was more appropriate due 
to the privacy and competition concerns, and other concerns, raised by 
asset-level disclosures,\152\ and one of these commentators submitted a 
grouped data and pool-level disclosure format for the Commission to 
consider as an alternative to asset-level reporting.\153\ Our proposal 
did not include grouped account data for Equipment ABS, and it is 
unclear whether the suggestions we received on a possible grouped 
account approach for this asset class continued to be supported by 
commentators based on the comments received.\154\ A group of issuers 
through a trade association submitted a suggestion for standardized 
pool-level disclosures, but we preliminarily believe that more granular 
disclosure--either asset-level or grouped account data--is appropriate 
at the time of offering and on an ongoing basis for Equipment ABS than 
provided by only pool-level disclosures.\155\ In order to better 
analyze comments received and formulate the appropriate disclosure 
requirements for Equipment ABS, we request additional comment below.
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    \151\ For purposes of this discussion, we refer to ABS backed by 
auto loans and leases as ``Auto ABS.''
    \152\ See letters from Americredit, ASF (auto ABS issuers), 
Vehicle ABS Group on the 2010 ABS Proposing Release.
    \153\ See letter on the 2010 ABS Proposing Release from ASF's 
auto ABS issuer members and certain investors members. The auto ABS 
issuer members and certain investor members submitted a 
recommendation for grouped account and pool-level disclosures for 
ABS backed by auto loans and leases. The recommendation suggested 
that at the time of an Auto ABS offering and monthly thereafter an 
issuer would provide statistical information about the underlying 
pool in the form of grouped-asset representative data lines and 
prescribed stratification tables.
    \154\ Navistar submitted a grouped account disclosure proposal 
for Equipment ABS, but Navistar subsequently was a signatory to a 
standardized pool-level format submitted by the Captive Equipment 
ABS Issuer Group. See letters about the 2010 ABS Proposing Release 
from Navistar and the Captive Equipment ABS Issuer Group (located in 
the memorandum to file dated March 8, 2011 covering the staff's 
meeting with members of the Financial Services Roundtable). It is 
unclear in light of their participation in the Captive Equipment ABS 
Issuer Group letter whether Navistar's grouped account suggestion 
still stands. Also, the Captive Equipment ABS Issuer Group submitted 
in their letter dated December 13, 2010 (located in the memorandum 
to filed dated December 15, 2010 covering the staff's meeting with 
members of the Roundtable) a grouped data proposal. However, as 
noted above, in March 2011 the Captive Equipment ABS Issuer Group 
later recommended standardized pool-level disclosures.
    \155\ See letter regarding the 2010 ABS Proposing Release from 
members the Captive Equipment ABS Issuer Group contained in the 
memorandum to file dated March 8, 2011 (suggesting that their 
recommended pool-level disclosure format was based on feedback they 
received from investors. However, we did not receive any comment 
letters from investors that supported this position).
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Request for Comment
    86. Is it possible to require asset-level data, both initially and 
on an ongoing

[[Page 47969]]

basis, and address commentators' privacy and competitive concerns 
applicable to the Equipment ABS sector? What particular data elements 
would need to be revised or eliminated?
    87. Is asset-level data necessary for investors to independently 
perform due diligence for Equipment ABS? \156\ Or would a grouped 
account disclosure requirement along with pool-level disclosures be 
sufficient for investors to independently perform due diligence and 
also address commentators' privacy and competition concerns? If so, 
would it be appropriate to require for Equipment ABS similar disclosure 
requirements that were recommended by commentators for Auto ABS? \157\
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    \156\ See Section 7(c) of the Securities Act.
    \157\ See letter on the 2010 ABS Proposing Release from ASF's 
auto ABS issuer members and certain investors members (submitting a 
recommendation for grouped account and pool-level disclosures for 
ABS backed by auto loans and leases.)
---------------------------------------------------------------------------

    88. Could the grouped account and pool-level disclosures that 
commentators recommended for initial and ongoing reporting of Auto ABS 
be used for Equipment ABS? Would commentators' recommended disclosure 
requirements for Auto ABS need to be altered to fit the Equipment ABS 
sector? If so, how would it need to change? Is there a more appropriate 
grouped account format for Equipment ABS? Please be specific in your 
response.
    For Equipment Floorplan ABS, some commentators suggested that 
asset-level data was not appropriate.\158\ We recognize that Equipment 
Floorplan ABS, as revolving assets, may share some characteristics with 
other asset classes for which grouped account data may be appropriate; 
for instance, credit cards are typically structured as revolving asset 
master trusts and Equipment Floorplan ABS are also typically structured 
as revolving asset master trusts. Like Equipment ABS, however, we did 
not receive a recommendation for a grouped account data approach.\159\ 
A group of issuers through a trade association recommended that we 
require standardized pool-level disclosures, but we preliminarily 
believe that more granular disclosure is appropriate at the time of 
offering and on an ongoing basis than is provided by only pool-level 
disclosures.\160\ In order to better analyze comments and formulate the 
appropriate disclosure requirements for Equipment Floorplan ABS, we 
request additional comment below.
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    \158\ See letters from Captive Equipment ABS Issuer Group, CNH 
and Navistar on the 2010 ABS Proposing Release (expressing concerns 
that asset-level reporting for floorplan receivables ABS was not 
appropriate due to obligor privacy concerns, concerns over the 
release of proprietary information and increased costs.)
    \159\ Navistar expressed support in their comment letter for the 
floorplan grouped data disclosure proposal proposed in a letter from 
the Vehicle ABS Group. See letters from Navistar and the Vehicle ABS 
Group about the 2010 ABS Proposing Release. However, the Vehicle ABS 
Group later withdrew support for their recommendation in favor of 
the grouped account disclosure recommended by ASF's issuer and 
investor members for ABS backed by auto floorplans. See letter from 
the Vehicle ABS Group about the 2010 ABS Release dated November 8, 
2010. ASF submitted a grouped account recommendation for vehicle 
floorplan ABS, but it was not clear that this proposal covered 
Equipment Floorplan ABS. See the letter on the 2010 ABS Proposing 
Release from ASF issuer and investor members (submitting a 
recommendation for grouped account disclosures for auto floorplan 
ABS).
    \160\ See letter regarding the 2010 ABS Proposing Release from 
members the Captive Equipment ABS Issuer Group contained in the 
memorandum to file dated March 8, 2011 (suggesting that their 
recommended pool-level disclosure format was based on feedback they 
received from investors. However, we did not receive any comment 
letters from investors that supported this position).
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Request for Comment
    89. Is it possible to require asset-level data, both initially and 
on an ongoing basis, and address commentators' privacy and competitive 
concerns applicable to the Equipment Floorplan ABS sector? What 
particular data elements would need to be revised or eliminated?
    90. Is asset-level data necessary for investors to independently 
perform due diligence for Equipment Floorplan ABS? Or would a grouped 
account disclosure requirement be sufficient for investors to 
independently perform due diligence and also address commentator's 
privacy and competition concerns? If so, would it be appropriate to 
require for Equipment Floorplan ABS \161\ similar disclosure 
requirements that were recommended for Auto Floorplan ABS? \162\ Would 
it resolve commentators' privacy and competitive concerns?
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    \161\ See letter from ASF on the auto sector setting forth the 
alternative disclosure regime recommended by ASF's auto ABS grouped-
asset investor members and issuer members.
    \162\ For purposes of this discussion, we refer to ABS backed by 
auto floorplans as ``Auto Floorplan ABS.''
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    91. Could the grouped account disclosures that commentators 
recommended for initial and ongoing reporting for Auto Floorplan ABS 
also be used for Equipment Floorplan ABS? Would commentators' 
recommended disclosure requirements for Auto Floorplan ABS need to be 
altered to fit the Equipment Floorplan ABS sector? If so, how would it 
need to change? Is there a more appropriate grouped account format for 
Equipment Floorplan ABS? Please be specific in your response.
3. Additional Requests for Comment on When to Require Schedule L
    In our 2010 ABS Proposing Release under our proposed requirements 
for when asset-level data would be required in a prospectus, we 
proposed to require that issuers provide for each asset in the pool all 
of the asset-level data points enumerated in proposed Schedule L of 
Regulation AB as of a recent practicable date, defined as the 
``measurement date,'' at the time of a Rule 424(h) prospectus.\163\ We 
also proposed that an updated Schedule L, as of the cut-off date for 
the securitization, be provided with the final prospectus under Rule 
424(b). Finally, we proposed that if issuers are required to report 
changes to the pool under Item 6.05 of Form 8-K, then an updated 
Schedule L would be required.\164\
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    \163\ See proposed Item 1111A of Regulation AB and the 2010 ABS 
Proposing Release at 23356.
    \164\ In footnote 235 of the 2010 ABS Proposing Release we 
stated that if a new asset is added to the pool during the reporting 
period, an issuer would be required to provide the asset-level 
information for each additional asset as required by our proposed 
revisions to both Item 1111 of Regulation AB and Item 6.05 of Form 
8-K. See the 2010 ABS Proposing Release at 23356.
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    Under our proposed revisions to Item 6.05 of Form 8-K, however, we 
proposed that a new Schedule L be required to be filed if any material 
pool characteristic of the actual asset pool at the time of issuance of 
the asset backed securities differs by 1% or more than the description 
of the asset pool in the prospectus filed for the offering pursuant to 
Securities Act Rule 424.\165\ In our discussion of asset-level ongoing 
reporting requirements, we stated that if assets are added to the pool 
during the reporting period, either through prefunding periods, 
revolving periods or substitution, disclosure would be required under 
our proposed revisions to Item 6.05 on Form 8-K along with the Schedule 
L data contained in proposed Item 1111A of Regulation AB.\166\
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    \165\ See the 2010 ABS Proposing Release at 23392. As proposed, 
if any material pool characteristic of the actual asset pool at the 
time of issuance of the asset backed securities differs by 1% or 
more than the description of the asset pool in the prospectus filed 
for the offering pursuant to Securities Act Rule 424 an issuer would 
be required to file an Item 6.05 of Form 8-K and provide the 
disclosures required under Item 1111 and Item 1112 of Regulation AB. 
Under the proposed Item 1111(h) of Regulation AB issuers would be 
required to provide a Schedule L. In addition, the item, as proposed 
to be revised, also requires a description of the changes that were 
made to the asset pool, including the number of assets substituted 
or added to the asset pool.
    \166\ See the 2010 ABS Proposing Release at 23368.
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    One investor, in response to our 2010 ABS Proposing Release, 
recommended that if assets are added to the pool through prefunding 
periods or revolving periods during the month a new

[[Page 47970]]

Schedule L should be provided.\167\ This commentator suggested that 
such a requirement will allow investors to evaluate the risk layering 
introduced by any new collateral that is added to securitizations after 
issuance. This comment seemed to indicate that it was not clear an Item 
6.05 Form 8-K was required when prefunding or revolving assets 
increased or changed the pool by 1% or more, although that was the 
intention of the language in the proposal. Therefore, we are requesting 
additional comment to determine whether we should clarify this proposed 
requirement by specifying in Item 6.05 that the filing of a Schedule L 
is required when assets are added to the pool after the issuance of the 
securities, either through prefunding periods, revolving periods or 
substitution and the triggers in that item are met.
---------------------------------------------------------------------------

    \167\ See letter from Prudential (suggesting that for 
securitizations with prefunding periods or revolving transactions a 
new Schedule L should be filed monthly when new collateral is 
added.)
---------------------------------------------------------------------------

Request for Comment
    92. Should we specify in Item 6.05 of Form 8-K that a new Schedule 
L must be filed when assets are added to the pool after issuance, 
either through prefunding periods, revolving periods or substitution 
and the triggers in that item are met?
    93. Instead, should we require that filing of a new Schedule L be 
triggered when assets are added to the pool during a month, 
distribution period or some other timeframe?
    94. Rather than require that Schedule L be filed with or as an 
exhibit to a current report on Form 8-K, under Item 6.05, should it be 
required to be filed under a new requirement as an exhibit to Form 10-
D? Please be specific in your response.
    95. Should the Schedule L data include information about all assets 
in the pool, including the new assets? If so, should we clarify in an 
instruction this will just be repeating the original schedule or should 
we require that it be updated? Could any of the information be updated? 
If so, should we require that? Or should Schedule L data only be 
required for the assets added during the reporting period?
    96. Could investors evaluate risk layering introduced by new assets 
if a new Schedule L is required only for the new assets added during 
the relevant period?
    97. Current disclosure requirements under Item 1121(b) of 
Regulation AB require that during a prefunding or revolving period, or 
if there has been a new issuance of asset-backed securities backed by 
the same pool under a master trust, during the fiscal year of the 
issuing entity, updated pool composition information in the Form 10-D 
report is required to be provided in the last required distribution 
report of the fiscal year of the issuing entity in accordance with 
Items 1110, 1111 and 1112 of Regulation AB.\168\ If, as proposed in the 
2010 ABS Proposing Release, updated asset-level information would be 
required to be provided with an Item 6.05 Form 8-K when prefunding or 
revolving assets change the pool by 1% or more, would the information 
required by Item 1121(b) be necessary? Should Item 1121(b) be revised 
to specifically require updated asset-level information be provided in 
the last required distribution report of the fiscal year of the issuing 
entity?
---------------------------------------------------------------------------

    \168\ Also, updated information is required in the first Form 
10-D report for the period in which the prefunding or revolving 
period ends (if applicable).
---------------------------------------------------------------------------

4. Additional Requests for Comment on Privately-Issued Structured 
Finance Products
    In the 2010 ABS Proposing Release, we proposed amendments to our 
safe harbors for exempt offerings and resales and new related rules 
regarding the information that must be made available to investors in 
privately-issued asset-backed securities.\169\ We proposed to require 
that, in order for a reseller of a ``structured finance product,'' as 
proposed to be defined,\170\ to sell a security in reliance on 
Securities Act Rule 144A,\171\ or in order for an issuer of a 
structured finance product to sell a security in reliance on Rule 506 
of Regulation D,\172\ certain conditions had to be met.\173\
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    \169\ See the 2010 ABS Proposing Release at 23393.
    \170\ The 2010 ABS Proposals would apply to any ``structured 
finance product,'' which would be more broadly defined than in the 
Regulation AB Item 1101(c) definition of ``asset-backed security'' 
in order to reflect the wide range of securitization products that 
are sold in the private markets.
    \171\ 17 CFR 230.144A.
    \172\ 17 CFR 230.506.
    \173\ See proposed revisions toRule 144A(a)(8), Rule 192, Rule 
501 and Rule 502 in the 2010 ABS Proposing Release.
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    For sales of structured finance products made in reliance on Rule 
144A or Rule 506, first, under our proposal the underlying transaction 
agreement of the issuer would have to grant any purchaser, any security 
holder and any prospective purchaser of the securities designated by 
the holder the right to obtain, upon request of the purchaser or 
security holder, information that would be required if the offering 
were registered on Form S-1 or proposed Form SF-1 under the Securities 
Act and any ongoing information regarding the securities that would be 
required by Section 15(d) of the Exchange Act, if the issuer were 
required to file reports under that section. Second, the issuer would 
have to represent that it would provide such information to the 
purchaser, security holder, or prospective purchaser upon request of 
the purchaser or security holder.\174\
---------------------------------------------------------------------------

    \174\ See the 2010 ABS Proposing Release at 23396
---------------------------------------------------------------------------

    As discussed above, in the 2010 ABS Proposing Release, we also 
proposed an amendment to Regulation AB that would require issuers of 
registered ABS offerings to disclose in the prospectus asset-level 
information in a standardized format.\175\ Thus, together with the 
proposed asset-level requirements, the proposed amendments for 
privately issued structured finance products would require that issuers 
in offers and sales of structured finance products in reliance on Rule 
144A or Rule 506 would need to provide, upon request, asset-level 
disclosures, along with other disclosures required by Regulation AB.
---------------------------------------------------------------------------

    \175\ See the ABS 2010 ABS Proposing Release at 23355.
---------------------------------------------------------------------------

    In the 2010 ABS Proposing Release, we requested comment on whether 
we should provide more specificity in the rules for privately issued 
structured finance products covering what disclosure would be required 
to be provided and, if so, what types of disclosure we should 
specifically require and whether the required disclosures should differ 
by type of security and, if so, in what way. We also requested comment 
on whether our proposal with respect to ongoing information regarding 
the securities was appropriate.
    In response to our 2010 ABS Proposals, several commentators 
expressed concern regarding the disclosure standards for privately 
issued structured finance products.\176\ Commentators noted that there 
are not clear information requirements for certain types of ABS that 
are not typically offered under Regulation AB, such as CDOs, CLOs, 
asset-backed commercial paper or synthetic ABS.\177\ Commentators 
expressed concerns

[[Page 47971]]

regarding the standards for disclosure and noted that any novel asset 
type or structure would face uncertainty regarding their disclosure 
obligations.\178\ In addition, some commentators asked the Commission 
to recognize the unique characteristics of different asset 
classes.\179\
---------------------------------------------------------------------------

    \176\ See letters from ABA, ABAASA, Association of Financial 
Markets in Europe/European Securitisation Forum (AFME/ESF), ASF, 
Cleary Gottlieb Steen and Hamilton (Cleary), PPM America (PPM), 
Sallie Mae, SIFMA (dealers and sponsors), Wells Fargo on the 2010 
ABS Proposing Release.
    \177\ See letters from ABA, ASF and SIFMA on the 2010 ABS 
Proposing Release. The ASF suggested that the proposed disclosure 
regime would be untenable because the safe harbor for securities 
that fall outside of the current Regulation AB definition would be 
subject to a hybrid of the corporate and Regulation AB disclosure 
requirements, without the benefit of detail on how those disclosure 
requirements would apply.
    \178\ See letters from AFME/ESF, SIFMA (dealers and sponsors), 
and Wells Fargo on the 2010 ABS Proposing Release. SIFMA (dealers 
and sponsors) suggested that the uncertainty over disclosure 
requirements could affect the ability of insurance-linked 
securities, whole business securitizations, future flow 
securitizations, securitizations of film rights, franchise fees, IP 
licensing fees, charged-off assets, leases exceeding the limits of 
the Reg. AB definition of ABS and non-revolving assets exceeding a 
year to rely upon Rule 144A. Wells Fargo expressed concern regarding 
the uncertainty in determining the applicable reporting requirements 
for future flow, film rights, franchise fees, patent royalties, 
certain lease transactions and novel asset classes and structures.
    \179\ See letters from ABASA, AFME/ESF and Cleary on the 2010 
ABS Proposing Release. AFME/ESF suggested that it would be 
inappropriate to apply Regulation AB to UK mortgage master trust 
issuers without adjustment. Cleary urged the Commission to 
``acknowledge that some of the detailed, asset-level disclosure 
mandated by the Proposed Rules will simply not be possible for some 
issuers, in some asset classes, to compile without expending levels 
of time and expense that are simply not warranted.'' Cleary 
recommended revising the proposal to require ``issuers to provide 
(in connection with the initial placements) the information that 
would be required if the offering were registered on Form S-1 or 
Form SF-1 under the Securities Act, and to provide (on an ongoing 
basis) the information that would be required by Section 15(d) of 
the Exchange Act, in each case if requested, only to the extent that 
the issuer possesses such information or can acquire it without 
unreasonable effort or expense.'' Cleary also suggested that ``such 
required information in each case may differ as to format, 
presentation, or specific loan-level data points from the 
requirements of Regulation AB, and that loan-level information may 
be omitted for one or more portfolio components not exceeding a 
specified percentage of the relevant portfolio individually and a 
specified percentage of the relevant portfolio in the aggregate.''
---------------------------------------------------------------------------

    In light of these comments, we are requesting comment on whether we 
should only require asset-level disclosures where the ``structured 
finance product'' being sold in reliance on Rule 144A, or Rule 506 of 
Regulation D, is backed by or collateralized by assets of an asset 
class for which there are prescribed asset-level reporting requirements 
in Regulation AB. As proposed, this would include: residential mortgage 
backed securities; commercial mortgage backed securities; automobiles 
loans or leases; equipment loans or leases; student loans; floorplan 
financings; corporate debt; and resecuritizations.
Request for Comment
    98. Should we only require that the transaction agreements 
underlying structured finance products sold in reliance on Rule 144A or 
sold pursuant to Rule 506 be required to provide for asset-level 
disclosures if the particular asset class of the securities are of an 
asset class where asset-level disclosures are prescribed in Regulation 
AB (i.e., residential mortgage backed securities; commercial mortgage 
backed securities; automobiles loans or leases; equipment loans or 
leases; student loans; floorplan financings; corporate debt; and 
resecuritizations)? Should securities where the asset class is not of 
an asset class where asset-level disclosure is required under 
Regulation AB be exempted from providing asset-level disclosure?
    99. Is there any reason that we should not require structured 
finance product issuers that utilize the safe harbors to comply with 
the proposed asset-level disclosure requirements for initial and/or 
ongoing information if asset-level disclosure for the particular asset 
class underlying the transaction is required under Regulation AB?
    100. For securities that fall outside the Regulation AB definition 
of ``asset-backed securities,'' how can the Commission address 
commentators' concern that those securities would be subject to a 
hybrid of the corporate and Regulation AB disclosure requirements? 
\180\

    \180\ See letter from ASF on the 2010 ABS Proposing Release 
(expressing that the array of structured finance products offered 
and sold in the private placement market may technically fall 
outside the Regulation AB definition of ``asset-backed securities,'' 
which would by default subject them to the corporate disclosure 
regime, together with some elements of the Regulation AB disclosure 
regime).
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101. If we do not require asset-level disclosures for certain 
``structured finance products'' or ``novel asset types or structures'' 
that fall outside the Regulation ABS definition of ``asset-backed 
securities,'' are there other types of disclosure that we should 
require the issuer to provide to investors or prospective purchasers? 
How should ``novel asset types or structures'' be defined? Is there any 
guidance that the Commission should provide for structured finance 
products that fall outside of Regulation AB's definition of ABS?

C. Waterfall Computer Program

    In the 2010 ABS Proposing Release, we proposed to require that most 
ABS issuers file a computer program that gives effect to the flow of 
funds, or ``waterfall,'' provisions of the transaction. The proposal 
was designed to make it easier for an investor to analyze the ABS 
offering at the time of its initial investment decision and to monitor 
ongoing performance of the ABS. In this way, market participants would 
be able to better conduct their own evaluations of ABS. Although 
several commentators supported the proposal because it would promote 
transparency and enable investors to make better decisions,\181\ 
several commentators opposed the proposal for various reasons, such as 
the lack of clarity of the requirements of our proposal,\182\ the cost 
burden on issuers and/or investors,\183\ and concern about liability 
under the federal securities laws.\184\ We received many helpful and 
detailed suggestions regarding the proposed waterfall computer program 
requirement, and plan to re-propose the requirement separately from 
adopting requirements for ABS shelf eligibility, offering process and 
disclosures, including asset-level disclosures. We believe these 
requirements could be adopted and implemented together, separately from 
any waterfall disclosure component.
---------------------------------------------------------------------------

    \181\ See comment letters from AMI; Bank of New York Mellon; 
CalPERS; Keith G. Cascio; CoStar Group; Council of Institutional 
Investors; Knowledge Decision Securities; Risk Management 
Association/Securitization Risk Roundtable; and XBRL US on the 2010 
ABS Proposing Release.
    \182\ See comment letters from ABA; BOA; Discover; FSR; Vehicle 
ABS Group; JP Morgan; and Sallie Mae on the 2010 ABS Proposing 
Release.
    \183\ See comment letters from ABASA; ABA; American Financial 
Services Association (AFSA); BOA; Business Software Alliance; 
Capital One Financial; Citigroup Global Markets (Citi); CREFC; 
Discover; FSR; Vehicle ABS Group; Intex Solutions; IPFS Corp; JP 
Morgan; MathWorks; MBA; Navistar; PPM; PricewaterhouseCoopers LLP; 
Sallie Mae; SIFMA; Trepp; UBmatrix; Wells Fargo; and Wyndham 
Worldwide on the 2010 ABS Proposing Release.
    \184\ See comment letters from ABASA; ABA; AFSA; AmeriCredit 
Corp; BOA; (Citi); Discover; Intex Solutions; JP Morgan; MBA; Sallie 
Mae; SIFMA; Vehicle ABS Group; Wells Fargo on the 2010 ABS Proposing 
Release.
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IV. Transition Period

    As we explained in the 2010 ABS Proposing Release, we believe that 
compliance dates should not extend past a year after adoption of the 
new rules. We are considering the appropriate timing for implementation 
of the 2010 ABS Proposals and today's re-proposals, if adopted.
Request for Comment
    102. Should implementation of any proposals be phased-in? If so, 
explain why and provide a reasonable timeframe for a phase-in (e.g., 
six months, one or two years)?
    103. Should implementation be based on a tiered approach that 
relates to a characteristic other than the size of the sponsor? Is 
there any reason to structure implementation around the asset class of 
the securities?

[[Page 47972]]

V. General Request for Comment

    We request comment on the specific issues we discuss in this 
release, and on any other approaches or issues that we should consider 
in connection with the proposed amendments. We seek comment from any 
interested persons, including investors, asset-backed issuers, 
sponsors, originators, servicers, trustees, disseminators of EDGAR 
data, industry analysts, EDGAR filing agents, and any other members of 
the public.

VI. Paperwork Reduction Act

A. Background

    Certain provisions of the proposed rule amendments contain 
``collection of information'' requirements within the meaning of the 
Paperwork Reduction Act of 1995 (PRA).\185\ The Commission is 
submitting these proposed amendments and proposed rules to the Office 
of Management and Budget (OMB) for review in accordance with the 
PRA.\186\ An agency may not conduct or sponsor, and a person is not 
required to comply with, a collection of information unless it displays 
a currently valid control number. The titles for the collections of 
information are: \187\
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    \185\ 44 U.S.C. 3501 et seq.
    \186\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
    \187\ The paperwork burden from Regulation S-K is imposed 
through the forms that are subject to the requirements in those 
regulations and is reflected in the analysis of those forms. To 
avoid a Paperwork Reduction Act inventory reflecting duplicative 
burdens and for administrative convenience, we assign a one-hour 
burden to Regulation S-K.
---------------------------------------------------------------------------

    (1) ``Form S-3'' (OMB Control No. 3235-0073);
    (2) ``Form 10-D'' (OMB Control No. 3235-0604);
    (3) ``Regulation S-K'' (OMB Control No. 3235-0071); and
    (4) ``Form SF-3'' (a proposed new collection of information).
    The forms listed in Nos. 1 through 3 were adopted under the 
Securities Act and the Exchange Act and set forth the disclosure 
requirements for registration statements and periodic reports filed 
with respect to asset-backed securities and other types of securities 
to inform investors. The form listed in No. 4 is a newly proposed 
collection of information under the Securities Act. Form SF-3, if 
adopted, would represent the registration form for offerings that meet 
certain shelf eligibility conditions and can be offered on a delayed 
basis under Rule 415.
    Compliance with the proposed amendments would be mandatory, and 
responses to the information collections would not be kept confidential 
and there would be no mandatory retention period for proposed 
collections of information.

B. Revisions to PRA Reporting and Cost Burden Estimates

    Our PRA burden estimate for the existing collection of information 
on Form S-3 is based on an average of the time and cost incurred by all 
types of public companies, not just ABS issuers, to prepare the 
collection of information. In contrast, Form 10-D is a form that is 
only prepared and filed by ABS issuers. In 2004, we codified 
requirements for ABS issuers in these regulations and forms, 
recognizing that the information relevant to asset-backed securities 
differs substantially from that relevant to other securities.
    Our PRA burden estimates for the proposed amendments are based on 
information that we receive on entities assigned to Standard Industrial 
Classification Code 6189, the code used with respect to asset-backed 
securities, as well as information from outside data sources.\188\ When 
possible, we base our estimates on an average of the data that we have 
available for years 2004 through 2010. In some cases, our estimates for 
the number of asset-backed issuers that file Form 10-D with the 
Commission are based on an average of the number of ABS offerings in 
2006 through 2010.\189\
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    \188\ We rely on two outside sources of ABS issuance data. We 
use the ABS issuance data from Asset-Backed Alert on the initial 
terms of offerings, and we supplement that data with information 
from Securities Data Corporation (SDC).
    \189\ Form 10-D was not implemented until 2006. Before 
implementation of Form 10-D, asset-backed issuers often filed their 
distribution reports under cover of Form 8-K.
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1. Form S-3 and Form SF-3
    Our current PRA burden estimate for Form S-3 is 243,927 annual 
burden hours. This estimate is based on the assumption that most 
disclosures required of the issuer are incorporated by reference from 
separately filed Exchange Act reports. However, because ABS issuers 
using Form S-3 often present all of the relevant disclosure in the 
registration statement rather than incorporate relevant disclosure by 
reference, our current burden estimate for ABS issuers using Form S-3 
under existing requirements is similar to our current burden estimate 
for ABS issuers using Form S-1. During 2004 through 2010, we received 
an average of 90 Form S-3 filings annually related to asset-backed 
securities.
    We are proposing to move the requirements for asset-backed issuers 
into new forms that would be solely for the registration by offerings 
of asset-backed securities. Under the proposal, proposed Form SF-3 
would be the ABS shelf equivalent form of existing Form S-3. For 
purposes of our calculations, we estimate that the proposals relating 
to shelf eligibility would cause a 5% movement in the number of filers 
(i.e., a decrease of five registration statements) out of the shelf 
system due to the new requirements which include the proposed executive 
officer certification, the proposed transaction requirement for the 
credit risk manager, the proposed transaction requirement related to 
investor communications, and the proposed annual evaluations of 
compliance with timely Exchange Act reporting and timely filing of 
transaction agreements and certifications.\190\ On the other hand, we 
estimate the number of shelf registration statements for ABS issuers 
would increase by five as a result of the outstanding proposal from the 
2010 ABS Proposing Release to eliminate the practice of providing a 
base prospectus and a prospectus supplement for these issuers.\191\ 
Thus, we estimate that the annual number of shelf registration 
statements concerning ABS offerings would remain the same. Accordingly, 
since the proposals would shift all shelf eligible ABS filings from 
Form S-3 to Form SF-3, we estimate that the proposals would cause a 
decrease of 90 ABS filings on Form S-3 and a corresponding number of 90 
ABS filings on Form SF-3s filed annually.\192\
---------------------------------------------------------------------------

    \190\ We calculated the decrease of five Form SF-3s by 
multiplying the average number of Form S-3s filed (90) by 5 percent.
    \191\ See Section II.D. of the 2010 ABS Proposing Release. Based 
on staff reviews, we believe it is very unusual to see ABS 
registration statements with multiple unrelated collateral types 
such as auto loans and student loans. There are occasionally 
multiple related collateral types such as HELOCs, subprime mortgages 
and Alt-A mortgages in ABS registration statements.
    \192\ This is based on the number of registration statements for 
ABS issuers filed on Form S-3 and the four changes due to our rule 
proposal.
---------------------------------------------------------------------------

    In 2004, we estimated that an ABS issuer, under the 2004 
amendments, would take an average of 1,250 hours to prepare a Form S-3 
to register ABS.\193\ Additionally, in the January 2011 ABS Issuer 
Review Release, we estimated that the requirements described in that 
release would increase the annual incremental burden to ABS issuers by 
30 hours per form.\194\ Therefore, we currently estimate that it would 
take an average of 1,280 hours to prepare a Form S-3 to register ABS. 
For registration statements, we estimate that 25% of the burden of 
preparation is

[[Page 47973]]

carried by the company internally and that 75% of the burden is carried 
by outside professionals retained by the registrant at an average cost 
of $400 per hour.\195\
---------------------------------------------------------------------------

    \193\ See 2004 ABS Adopting Release and 2004 ABS Proposing 
Release.
    \194\ See January 2011 ABS Issuer Review Release at 4239.
    \195\ See, e.g., Credit Ratings Disclosure, Release No. 33-9070 
(Oct. 7, 2009) [74 FR 53086].
---------------------------------------------------------------------------

    We are proposing new and revised disclosure requirements for ABS 
issuers that, if adopted, would be a cost to filing on Form SF-3. In 
particular, we are proposing to add a shelf eligibility condition that 
the registrant file a certification at the time of each offering off of 
a shelf registration statement, or takedown, by the chief executive 
officer of the depositor or executive officer in charge of 
securitization of the depositor concerning the disclosure contained in 
the prospectus and the design of the securitization. We are also 
proposing a shelf eligibility condition that the underlying transaction 
agreement must provide for the appointment of a credit risk manager to 
review assets upon the occurrence of certain trigger events and 
provisions related to repurchase request dispute resolution. 
Additionally, we are proposing to require that registrants include 
disclosures concerning the credit risk manager in the prospectus in the 
registration statement. Lastly, we are proposing a shelf eligibility 
condition that the underlying transaction agreement include a provision 
requiring that the party responsible for making periodic filings on 
Form 10-D include any request received from an investor to communicate 
with other investors during the reporting period related to investors 
exercising their rights under the terms of the asset-backed security. 
We are also proposing changes to Form 10-D relating to disclosure 
regarding credit risk managers.
    If the proposals are adopted, we estimate that the incremental 
burden for ABS issuers to complete the disclosure requirements in Form 
SF-3, prepare the information, and file it with the Commission would be 
100 burden hours per response on Form SF-3. As a result, we estimate 
that each Form SF-3 would take approximately 1,380 hours to complete 
and file.\196\ We estimate the total internal burden for Form SF-3 to 
be 31,050 hours and the total related professional costs to be 
$37,260,000.\197\ This would result in a corresponding decrease in Form 
S-3 burden hours of 28,800 and $34,560,000 in professional costs.\198\
---------------------------------------------------------------------------

    \196\ The total burden hours to file Form SF-3 are calculated by 
adding the existing burden hours of 1,280 that we estimate for Form 
S-3 and the incremental burden of 100 hours imposed by our proposals 
for a total of 1,380 total burden hours.
    \197\ To calculate these values, we first multiply the total 
burden hours per Form SF-3 (1,380) by the number of Form SF-3s 
expected under the proposal (90), resulting in 124,200 total burden 
hours. Then, we allocate 25 percent of these hours to internal 
burden, resulting in 31,050 hours. We allocate the remaining 75 
percent of the total burden hours to related professional costs and 
use a rate of $400 per hour to calculate the external professional 
costs of $37,260,000.
    \198\ To calculate these values, we first multiply the total 
burden hours per Form S-3 (1,280) by the average number of Form S-3s 
over the period 2004-2010 (90), resulting in 115,200 total burden 
hours. Then, we allocate 25 percent of these hours to internal 
burden, resulting in 28,800 hours. We allocate the remaining 75 
percent of the total burden hours to related professional costs and 
use a rate of $400 per hour to calculate the external professional 
costs of $34,560,000.
---------------------------------------------------------------------------

2. Form 10-D
    In 2004, we adopted Form 10-D as a new form for only asset-backed 
issuers. This form is filed within 15 days of each required 
distribution date on the asset-backed securities, as specified in the 
governing documents for such securities. The form contains periodic 
distribution and pool performance information. We estimate that the 
yearly average number of Form 10-D filings is 10,000 \199\ and that the 
proposed new Regulation AB disclosure requirements that would be 
included in Form 10-D related to investor communications (Item 1121(g)) 
and credit risk managers (Item 1121(f)) would result in an additional 
burden of five hours per filing to prepare. Consistent with our 
estimate in 2004, we estimate that it currently takes 30 hours to 
complete and file a Form 10-D. Therefore, we estimate that the 
proposals would increase the number of hours to prepare, review, and 
file a Form 10-D to 35 burden hours; thus, increasing the total burden 
hours for all annual Form 10-D responses to an estimate of 350,000 
hours.\200\
---------------------------------------------------------------------------

    \199\ Our estimate is based on 1,000 respondents per year 
multiplied by 10 filings per respondent.
    \200\ The burden hours are calculated by multiplying 10,000 Form 
10-Ds by the 35 burden hours required to complete the form for a 
total of 350,000 hours.
---------------------------------------------------------------------------

    We allocate 75% of those hours (262,500 hours) to internal burden 
and the remaining 25% to external costs totaling $35,000,000 using a 
rate of $400 per hour.
3. Regulation S-K
    Regulation S-K, which includes the item requirements in Regulation 
AB, contains the requirements for disclosure that an issuer must 
provide in filings under both the Securities Act and the Exchange Act. 
We assign one burden hour to Regulation S-K for administrative 
convenience to reflect that the changes to the regulation did not 
impose a direct burden on companies.
4. Summary of Proposed Changes to Annual Burden Compliance in 
Collection of Information
    Table 1 illustrates the changes in annual compliance burden in the 
collection of information in hours and costs for existing reports and 
registration statements and for the proposed new registration statement 
for asset-backed issuers. Bracketed numbers indicate a decrease in the 
estimate.

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Decrease
                                          Current    Proposed     Current       or       Proposed        Current         Decrease or        Proposed
                 Form                     annual      annual      burden     increase     burden      professional       increase in      professional
                                         responses   responses     hours     in burden     hours          costs         professional          costs
                                                                               hours                                        costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
S-3...................................       2,065       1,075     243,927    [28,800]     215,127      $292,711,500     [$34,560,000]      $258,151,500
SF-3..................................  ..........          90  ..........      31,050      31,050  ................        37,260,000        37,260,000
10-D..................................      10,000      10,000     225,000      37,500     262,500        30,000,000         5,000,000        35,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Solicitation of Comments
    We request comments in order to evaluate: (1) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information would 
have practical utility; (2) the accuracy of our estimate of the burden 
of the proposed collection of information; (3) whether there are ways 
to enhance the quality, utility, and clarity of the information to be 
collected; and (4) whether there are ways to minimize the burden of the 
collection of information on those who are to respond, including 
through the use of automated collection techniques or other forms of 
information

[[Page 47974]]

technology.\201\ We also specifically request comment regarding:
---------------------------------------------------------------------------

    \201\ We request comment pursuant to 44 U.S.C. 3506(c)(2)(B).
---------------------------------------------------------------------------

    104. Whether and to what extent the proposed shelf eligibility 
requirements would cause a movement in filers that are currently 
eligible for shelf registration on Form S-3 out of shelf registration 
to proposed Form SF-3.
    Any member of the public may direct to us any comments concerning 
the accuracy of these burden estimates and any suggestions for reducing 
these burdens. Persons submitting comments on the collection of 
information requirements should direct the comments to the Office of 
Management and Budget, Attention: Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Washington, DC 20503, and should send a copy to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090, with reference to File No. S7-08-10. 
Requests for materials submitted to OMB by the Commission with regard 
to these collections of information should be in writing, refer to File 
No. S7-08-10, and be submitted to the Securities and Exchange 
Commission, Records Management, Office of Filings and Information 
Services, 100 F Street, NE., Washington, DC 20549. OMB is required to 
make a decision concerning the collection of information between 30 and 
60 days after publication of this release. Consequently, a comment to 
OMB is best assured of having its full effect if OMB receives it within 
30 days of publication.

VII. Economic Analysis

A. Background

    In April 2010, we proposed rules that would revise the disclosure, 
reporting and offering process for ABS.\202\ Among other things, in the 
2010 ABS Proposing Release we proposed eligibility requirements to 
replace the current credit rating references in shelf eligibility 
criteria for asset-backed security issuers (i.e., a certification by 
the chief executive of the depositor, risk retention, third party 
opinion relating to representations and warranties, and ongoing 
Exchange Act reporting). We also proposed to require that, with some 
exceptions, prospectuses for public offerings of asset-backed 
securities and ongoing Exchange Act reports contain specified asset-
level information about each of the assets in the pool in a 
standardized tagged data format. Further, we proposed to require asset-
backed issuers to provide investors with more time to consider 
transaction-specific information about the pool assets.
---------------------------------------------------------------------------

    \202\ See the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    In this release, we are re-proposing certain requirements for ABS 
shelf eligibility and filing deadlines for exhibits in ABS shelf 
offerings. We are also proposing new Form 10-D disclosure requirements 
related to investor communications and credit risk managers. Section 
23(a) of the Exchange Act \203\ requires the Commission, when making 
rules and regulations under the Exchange Act, to consider the impact a 
new rule would have on competition. Section 23(a)(2) prohibits the 
Commission from adopting any rule that would impose a burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Exchange Act. Section 2(b) of the Securities Act \204\ and 
Section 3(f) of the Exchange Act \205\ require the Commission, when 
engaging in rulemaking that requires it to consider whether an action 
is necessary or appropriate in the public interest, to consider, in 
addition to the protection of investors, whether the action would 
promote efficiency, competition, and capital formation. We have 
considered and discussed below the effects of the proposed rules on 
efficiency, competition, and capital formation, as well as the benefits 
and costs associated with the Commission's decisions in the proposed 
rulemaking. Except as noted below, our benefit-cost analysis included 
in the 2010 ABS Proposing Release remains unchanged and outstanding.
---------------------------------------------------------------------------

    \203\ 15 U.S.C. 78w(a).
    \204\ 15 U.S.C. 77b(b).
    \205\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

B. ABS Shelf Eligibility Proposals

    We are re-proposing the registrant and transaction requirements for 
ABS shelf registration because two of the proposed transaction 
requirements in the April 2010 Proposing Release--risk retention and 
continued Exchange Act reporting--will be required for most registered 
ABS offerings as a result of changes mandated by provisions of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act. Further, our 
re-proposals for ABS shelf registration eligibility are also made in 
connection with Section 939A of that Act which generally requires that 
we modify our regulations to remove any references to or requirement of 
reliance on credit ratings and to substitute in such regulations such 
standard of credit-worthiness that we determine as appropriate for such 
regulations. Therefore, instead of the investment grade ratings 
requirement, under our re-proposal, taking into account the context and 
purposes of the affected rules, we are proposing a CEO or executive 
officer certification, provisions in the transaction agreements 
requiring the appointment of an independent credit risk manager under 
certain conditions and certain dispute resolution provisions, and 
provisions in the transaction agreements related to investor 
communications for any offering off the Form SF-3 shelf registration 
statement, which we believe would be indicative of a higher quality 
security.
    We are also proposing to require that, in order to conduct a 
takedown off an effective shelf registration statement, an ABS issuer 
would be required to conduct an annual evaluation of compliance with 
the transaction requirements for shelf offerings conducted during the 
past year as well as compliance with timely Exchange Act reporting. 
Further, as re-proposed, issuers would be allowed to cure any failure 
to timely file the required certification or transaction agreements 
with required provisions. Specifically, under the re-proposal, the 
depositor would be deemed to satisfy the registrant requirements 
related to timely filing the certifications and transaction agreements 
90 days after the date all required filings are filed.
1. Benefits
    We believe a benefit of the re-proposed ABS shelf eligibility 
requirements is that they would replace the current investment grade 
rating condition while providing improved investor protections that 
would be indicative of a higher quality security. We believe that our 
proposal to require a certification by the depositor's chief executive 
officer or executive officer in charge of securitization may cause 
these officials to review more carefully the disclosure, and in this 
case, the transaction, and would encourage better oversight of the 
securitization process. As a result, certifiers may provide a more 
accurate review of the registration statement disclosures and the 
transaction. To the extent that a more careful review improves the 
securitization quality in the presence of such a certification, the 
proposed certification would be an appropriate eligibility requirement 
for shelf registration.
    We believe that our proposal requiring provisions in the underlying 
transaction agreements requiring the appointment of a credit risk 
manager to

[[Page 47975]]

review assets upon the occurrence of certain trigger events, requiring 
that the credit risk manager provide a report to the trustee of the 
findings and conclusions of the reviews of the assets, and requiring 
repurchase dispute resolution procedures should help the enforceability 
of contract terms surrounding representations and warranties regarding 
the pool assets. We are proposing to require that the transaction 
agreements require, at a minimum, review by the credit risk manager (1) 
when the credit enhancement requirements, as specified in the 
underlying transaction agreements, are not met; and (2) at the 
direction of investors pursuant to the process provided in the 
transaction agreement and disclosed in the prospectus. We believe 
specifying these two minimum trigger requirements should facilitate the 
ability of transaction parties to pursue transaction remedies, which we 
believe would be a feature of a higher quality security, while at the 
same time providing flexibility to transaction parties to develop more 
robust trigger requirements as they deem appropriate.
    The requirement that the credit risk manager not be affiliated with 
the sponsor, depositor, or servicer helps assure investors that the 
review of assets is impartial. By not prescribing specific procedures 
for the review and repurchase process, we are providing the credit risk 
manager and ABS investors with the flexibility to determine the most 
appropriate and efficient procedures for each ABS transaction. We 
believe that taken together our transaction requirements related to the 
appointment of a credit risk manager would better strengthen the 
enforceability of contract terms surrounding the representations and 
warranties regarding the pool assets for ABS shelf transactions and 
incentivize obligated parties to better consider the characteristics 
and quality of the assets underlying the securities, thus making them 
appropriate criteria for shelf eligibility.
    We believe that our proposal requiring a provision in an underlying 
transaction agreement to require the party responsible for making 
periodic filings on Form 10-D include in the Form 10-D any request from 
an ABS investor to communicate with other ABS investors related to 
investors exercising their rights under the terms of the asset-backed 
security would benefit ABS investors because facilitating communication 
among ABS investors enables them to exercise the rights included in the 
underlying transaction agreements. In this regard, as previously 
discussed in Part II.B.1(c) of this release, we are aware that ABS 
investors have had difficulty enforcing rights contained in 
transactions agreements, and in particular, those relating to the 
repurchase of underlying assets for breach of representations and 
warranties. We also believe the disclosure would benefit investors by 
helping solve collective action problems related to communication 
between investors and issuers. By decreasing the costs of communication 
among investors, this proposed requirement helps investors exercise the 
rights included in the underlying transaction agreements.
    The above three shelf eligibility requirements are designed to 
improve the quality of the securities being offered by strengthening 
investor protections, so that the offerings may appropriately be 
conducted quickly. To the extent that better investor protection 
increases investors' trust in the fairness and security of the ABS 
markets, the result could be lower cost of capital and increased 
investor participation in ABS markets, which should facilitate capital 
formation.
    We believe that requiring an annual evaluation of compliance with 
the registrant requirements in order to continue using an effective 
shelf registration statement would benefit investors because it would 
encourage issuers to file their Exchange Act reports and transaction 
documents in connection with prior offerings at the required time, and 
therefore, enhance informed investment decisions. We also believe that 
a 90-day cure period strikes an appropriate balance between monitoring 
issuers' compliance with the proposed shelf transaction requirements 
and commentator's concerns that the one-year penalty was too costly.
2. Costs
    We believe that the certification transaction requirement could 
impose additional review and oversight costs, potential litigation 
costs, and disclosure costs on ABS issuers. First, since the intent of 
the certification is to enhance the accountability and oversight of the 
ABS transaction, if effective, it will result in additional costs 
related to further verifying the characteristics of the asset pool, the 
payment and rights allocations, the distribution priorities and other 
structural features of the transactions. We note that these costs could 
be lessened to the extent that the certifier could rely in part on the 
review that would already be required in order for an issuer to comply 
with recently adopted Rule 193.\206\ Ultimately, we believe that for 
shelf offerings the benefit of improving the accuracy of securitization 
disclosures and enhancing the accountability and oversight of the ABS 
transaction justifies these additional review and oversight costs 
incurred by the ABS issuers.
---------------------------------------------------------------------------

    \206\ Rule 193 implemented Securities Act Section 7(d), as added 
by Section 945 of the Act, by requiring that any issuer registering 
the offer and sale of an ABS perform a review of the assets 
underlying the ABS.
---------------------------------------------------------------------------

    We have considered that the certification transaction requirement 
might also result in litigation costs for those signing the 
certification with the magnitude of the costs dependent on the scope of 
the certification. We received several comment letters indicating that 
the certification language included in our 2010 ABS Proposing release 
could be interpreted as a guarantee of the future performance of the 
assets underlying the ABS.\207\ We realize that unexpected losses 
incurred by security holders may be the result of misrepresentation by 
the securitization parties but may also be the outcome of a negative 
realization. Since the distinction is typically difficult to discern, a 
certification misinterpreted as a guarantee could have increased the 
likelihood of litigation, and therefore expected litigation costs to 
the certifier. In an attempt to mitigate these costs, we are proposing 
revised certification language, which we believe reduces a certifier's 
exposure to unnecessary litigation and limits litigation costs that the 
certification may create.
---------------------------------------------------------------------------

    \207\ See letters from ASF (issuer members), ABASA, CREFC and 
Wells Fargo on the 2010 ABS Proposing Release. Several commentators 
offered, as an alternative, that the CEO of the depositor certify to 
the adequacy and accuracy of the disclosure in the offering 
documents. See letters from ABA; ABASA; ASF; AusSF; BOA; CNH; FSR; 
JP Morgan; MBA; SIFMA (dealers and sponsors); Sallie Mae; and Wells 
Fargo.
---------------------------------------------------------------------------

    The proposed transaction requirements for shelf eligibility related 
to the credit risk manager would increase costs of securitization to 
ABS issuers to the extent a credit risk manager would not have 
otherwise been appointed in the transaction because they would be 
required to hire an additional participant in the transaction in order 
to maintain shelf eligibility. We have attempted to mitigate these 
costs by requiring that a credit risk manager be involved in the 
transaction only upon the occurrence of certain triggering events. We 
also recognize that not prescribing specific procedures for the review 
and repurchase process may impose a cost to investors if the 
transaction parties do not select

[[Page 47976]]

appropriate procedures for such process. This transaction requirement 
would also result in some additional disclosure costs as information 
about the credit risk manager will have to be provided in the ABS 
prospectus.
    The proposed disclosure requirements related to investor 
communications in distribution reports on Form 10-D would increase the 
disclosure costs of preparing these respective filings for ABS issuers. 
We also expect this requirement would impose additional costs on ABS 
issuers because the person responsible for making periodic filings on 
Form 10-D would need to design systems to receive investor requests to 
communicate and verify the identity of the investor making the request.
    We believe that requiring an annual evaluation of compliance with 
the registrant requirements would impose additional costs on ABS 
issuers because of any systems needed to ensure and check compliance 
with the reporting and filing requirements. However, we believe these 
costs should be minimal because these issuers should already have in 
most instances systems designed to ensure that reports and transaction 
agreements are being filed timely in accordance with rules under the 
Exchange Act or Securities Act, respectively.
    We recognize that some of the new shelf registration costs may be 
passed down the chain of securitization and ultimately to borrowers. 
The ability to pass costs on to borrowers would be constrained by 
competition from non-securitizing lenders, which would weaken the 
competitive ability of firms that solely rely on securitization for 
funding relative to other financial firms that have other sources of 
funding.
    Finally, if ABS sponsors are forced to bear all or some of these 
new costs and if these new costs exceed the costs of obtaining a credit 
rating, then ABS sponsors might choose to avoid the shelf registration 
process by registering their ABS on the proposed Form SF-1. 
Alternatively, they might choose to bypass SEC registration altogether 
and issue in private markets instead. This will have the effect of 
reduced efficiency and impeded capital formation. We seek comments and 
empirical data to help us assess the macroeconomic impact of the costs 
associated with the new shelf registration requirements.

C. Disclosure Requirements

    In addition to the shelf eligibility proposals, we are also 
proposing a disclosure requirement that would require disclosure in the 
prospectus concerning any party selected as a credit risk manager. We 
are also proposing to require ABS issuers to file copies of the 
underlying transaction agreements, including all attached schedules, 
and other agreements that are referenced (such as those containing 
representations and warranties regarding the underlying assets), at the 
same time as a preliminary prospectus that would be required under 
proposed Rule 424(h). We are also proposing to require in distribution 
reports filed on Form 10-D disclosure related to the review of pool 
assets by credit risk managers during the relevant distribution period 
as well as events involving a change in the credit risk manager.
1. Benefits
    We believe that providing disclosure concerning credit risk 
managers will facilitate an informed assessment by investors as to the 
appropriateness of the selected credit risk manager. We also believe 
that providing in distribution reports disclosure related to the credit 
risk manager's review of assets and any change in the credit risk 
manager would be beneficial to investors because it would provide them 
material information concerning such matters on a timely basis. 
Finally, requiring underlying transaction agreements to be filed in 
substantially final form at the same time as the preliminary prospectus 
should benefit investors by allowing them necessary time to analyze the 
actual underlying agreements containing the specific structure, assets, 
and contractual rights regarding each transaction. To the extent that 
additional time for investment analysis results in investors making 
better informed decisions on how to allocate capital, this requirement 
could improve economic efficiency and facilitate capital formation.
2. Costs
    The proposed disclosure requirements related to credit risk 
managers in prospectuses and distribution reports would increase the 
disclosure costs of preparing these filings for ABS issuers. The 
proposed requirement that ABS issuers file copies of the underlying 
transaction agreements at the same time as a preliminary prospectus 
that would be required under proposed Rule 424(h) may increase the 
costs associated with conducting an offering to the extent that such 
filing requirement exposes issuers to the risk of changing market 
conditions; however, such uncertainty is similar to that faced by other 
issuers of underwritten initial public offerings of debt whose final 
offer prices are not set for weeks or months after filing. To the 
extent the requirement requires that documents be completed earlier in 
the offering process, ABS issuers may face additional costs to 
accelerate drafting of the required documents. As noted earlier, for 
purposes of the PRA, we estimate that the incremental burden for ABS 
issuers to complete the disclosure requirements in Form SF-3, prepare 
the information, and file it with the Commission would be 100 burden 
hours per response on Form SF-3.

D. Requests for Comment

    We seek comments on all aspects of this Economic Analysis including 
identification and quantification of any additional costs and benefits. 
We also request comments on whether our proposals would promote 
efficiency, competition, and capital formation. Commentators are 
requested to provide empirical data and other factual support for their 
views, if possible.
    We further ask the following specific questions:
    105. Would the proposed credit risk manager and certification 
transaction requirement for shelf eligibility impose costs in addition 
to those identified above? How much would a credit risk manager be 
compensated for these services? Would insurance costs increase for 
those providing credit risk manager services or providing a 
certification? If so, by how much? Are there other measurable costs 
associated with these proposed requirements?
    106. Could the costs associated with the proposed shelf 
registration requirements be passed down the securitization chain? 
Would these costs affect an ABS issuer's choice between registering 
securities on proposed Form SF-3 or registering them on proposed Form 
SF-1? Would these costs affect an ABS issuer's willingness to register 
the securities altogether rather than issuing in the private markets?
    107. Do you believe that the proposed disclosure requirements will 
impose costs on other market participants?

VIII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996,\208\ a rule is ``major'' if it has resulted, or is likely 
to result in:
---------------------------------------------------------------------------

    \208\ Public Law 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the U.S. economy of $100 million or 
more;
     A major increase in costs or prices for consumers or 
individual industries; or Significant adverse effects on competition, 
investment, or innovation.
    We request comment on whether our proposed amendments would be a

[[Page 47977]]

``major rule'' for purposes of the Small Business Regulatory 
Enforcement Fairness Act. We solicit comment and empirical data on:
     The potential effect on the U.S. economy on an annual 
basis;
     Any potential increase in costs or prices for consumers or 
individual industries; and
     Any potential effect on competition, investment, or 
innovation.

IX. Regulatory Flexibility Act Certification

    The Commission hereby certifies pursuant to 5 U.S.C. 605(b) that 
the proposals contained in this release, if adopted, would not have a 
significant economic impact on a substantial number of small entities. 
The proposals relate to the registration, disclosure and reporting 
requirements for asset-backed securities under the Securities Act and 
the Exchange Act. Securities Act Rule 157 \209\ and Exchange Act Rule 
0-10(a) \210\ defines an issuer, other than an investment company, to 
be a ``small business'' or ``small organization'' if it had total 
assets of $5 million or less on the last day of its most recent fiscal 
year. As the depositor and issuing entity are most often limited 
purpose entities in an ABS transaction, we focused on the sponsor in 
analyzing the potential impact of the proposals under the Regulatory 
Flexibility Act. Based on our data, we only found one sponsor that 
could meet the definition of a small broker-dealer for purposes of the 
Regulatory Flexibility Act.\211\ Accordingly, the Commission does not 
believe that the proposals, if adopted, would have a significant 
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \209\ 17 CFR 230.157.
    \210\ 17 CFR 240.0-10(a).
    \211\ This is based on data from Asset-Backed Alert.
---------------------------------------------------------------------------

    We encourage written comments regarding this certification. We 
request in particular that commentators describe the nature of any 
impact on small entities and provide empirical data to support the 
extent of the impact.

X. Statutory Authority and Text of Proposed Rule and Form Amendments

    We are proposing the new rules, forms and amendments contained in 
this document under the authority set forth in Sections 6, 7, 10, 
19(a), and 28 of the Securities Act, Sections 13, 23(a), and 36 of the 
Exchange Act.\212\
---------------------------------------------------------------------------

    \212\ 15 U.S.C. 777aaa et.seq.
---------------------------------------------------------------------------

List of Subjects in 17 CFR parts 229, 230, 239, and 249

    Advertising, Reporting and recordkeeping requirements, Securities.
    For the reasons set out above, Title 17, Chapter II of the Code of 
Federal Regulations is proposed to be amended as follows:

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES 
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND 
CONSERVATION ACT OF 1975--REGULATION S-K

    1. The authority citation for part 229 continues to read in part as 
follows:

    Authority:  15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 777iii, 
77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78n-1, 78o, 78u-
5, 78w, 78ll, 78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 
80a-37, 80a-38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 U.S.C. 
1350, unless otherwise noted.
* * * * *
    2. Amend Sec.  229.601 by:
    a. Amending the exhibit table in paragraph (a) by adding an entry 
for ``(36)''; and
    b. Adding paragraph (b)(36).
    The additions read as follows:


Sec.  229.601  (Item 601) Exhibits.

    (a) * * *

Exhibit Table

* * * * *

                                                                      Exhibit Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Securities Act forms                                         Exchange Act forms
                                 -----------------------------------------------------------------------------------------------------------------------
                                                                    S-4                                     F-4             8-K
                                    S-1     S-3    SF-1    SF-3     \1\     S-8    S-11     F-1     F-3     \1\     10      \2\    10-D    10-Q    10-K
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
(36) Depositor Certification for  ......  ......  ......      X   ......  ......  ......  ......  ......  ......  ......  ......  ......  ......  ......
 shelf offerings of asset-backed
 securities.....................
(37) through (98) [Reserved]....    N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *
    (b) * * *
    (36) Certification for shelf offerings of asset-backed securities. 
For any offering of asset-backed securities (as defined in Sec.  
229.1101) made on a delayed basis under Sec.  230.415(a)(1)(vii), 
provide the certification required by General Instruction I.B.i.(a) of 
Form SF-3 (referenced in Sec.  239.45) exactly as set forth below:

Certification

    I, [identify the certifying individual,] certify as of [the date of 
the final prospectus under Securities Act Rule 424 (17 CFR 239.424)] 
that:
    1. I have reviewed the prospectus relating to [title of all 
securities, the offer and sale of which are registered] and am familiar 
with the structure of the securitization, including without limitation 
the characteristics of the securitized assets underlying the offering, 
the terms of any internal credit enhancements and the material terms of 
all contracts and other arrangements entered in to the effect the 
securitization;
    2. Based on my knowledge, the prospectus does not contain any 
untrue statement of a material fact or omit to state a material fact 
necessary to make the statements made, in light of the circumstances 
under which such statements were made, not misleading;
    3. Based on my knowledge, the prospectus and other information 
included in the registration statement of which it is a part, fairly 
present in all material respects the characteristics of the securitized 
assets underlying the offering described therein and the risks of 
ownership of the asset-backed securities described therein, including 
all credit enhancements and all risk factors relating to the 
securitized assets underlying the offering that would affect the cash 
flows sufficient to service payments on the asset-backed securities as 
described in the prospectus; and
    4. Based on my knowledge, taking into account the characteristics 
of the securitized assets underlying the offering, the structure of the 
securitization, including internal credit enhancements, and any other 
material features of the transaction, in each instance, as described in 
the prospectus, the securitization is designed to

[[Page 47978]]

produce, but is not guaranteed by this certification to produce, cash 
flows at times and in amounts sufficient to service expected payments 
on the asset-backed securities offered and sold pursuant to the 
registration statement
Date:------------------------------------------------------------------
-----------------------------------------------------------------------

[Signature]
-----------------------------------------------------------------------

[Title]

    The certification should be signed by the chief executive officer 
of the depositor or executive officer in charge of securitization of 
the depositor, as required by General Instruction I.B.1(a) of Form SF-
3.
* * * * *
    3. Amend Sec.  229.1100 by revising paragraph (f) as follows:


Sec.  229.1100  (Item 1100) General.

* * * * *
    (f) Filing of required exhibits. Where agreements or other 
documents in this Regulation AB are specified to be filed as exhibits 
to a Securities Act registration statement, such agreements or other 
documents, if applicable, may be incorporated by reference as an 
exhibit to the registration statement, such as by filing a Form 8-K in 
the case of offerings registered on Form SF-3 (Sec.  239.45 of this 
chapter). Exhibits, including agreements in substantially final form, 
must be filed and made part of the registration statement by the date 
the prospectus is required to be filed under Securities Act Rule 424(h) 
(Sec.  230.424 of this chapter). Final agreements must be filed and 
made part of the registration statement no later than the date the 
final prospectus is required to be filed under Securities Act Rule 424 
(Sec.  230.424 of this chapter).
    4. Amend Sec.  229.1101 by adding paragraph (m) to read as follows:


Sec.  229.1101  (Item 1101) Definitions.

* * * * *
    (m) Credit risk manager means any person appointed by the trustee 
to review the underlying assets for compliance with the representations 
and warranties on the underlying pool assets and is not affiliated with 
any sponsor, depositor, or servicer.
    5. Revise Sec.  229.1109 to read as follows:


Sec.  229.1109  (Item 1109) Trustees and other transaction parties.

    (a) Trustees. Provide the following information for each trustee:
    (1) State the trustee's name and describe the trustee's form of 
organization.
    (2) Describe to what extent the trustee has had prior experience 
serving as a trustee for asset-backed securities transactions involving 
similar pool assets, if applicable.
    (3) Describe the trustee's duties and responsibilities regarding 
the asset-backed securities under the governing documents and under 
applicable law. In addition, describe any actions required by the 
trustee, including whether notices are required to investors, rating 
agencies or other third parties, upon an event of default, potential 
event of default (and how defined) or other breach of a transaction 
covenant and any required percentage of a class or classes of asset-
backed securities that is needed to require the trustee to take action.
    (4) Describe any limitations on the trustee's liability under the 
transaction agreements regarding the asset-backed securities 
transaction.
    (5) Describe any indemnification provisions that entitle the 
trustee to be indemnified from the cash flow that otherwise would be 
used to pay the asset-backed securities.
    (6) Describe any contractual provisions or understandings regarding 
the trustee's removal, replacement or resignation, as well as how the 
expenses associated with changing from one trustee to another trustee 
will be paid.
    Instruction to Item 1109(a). If multiple trustees are involved in 
the transaction, provide a description of the roles and 
responsibilities of each trustee.
    (b) Credit risk manager. Provide the following for each credit risk 
manager:
    (1) State the credit risk manager's name and describe its form of 
organization.
    (2) Describe to what extent the credit risk manager has had prior 
experience serving as a credit risk manager for asset-backed securities 
transactions involving similar pool assets.
    (3) Describe the credit risk manager's duties and responsibilities 
regarding the asset-backed securities under the governing documents and 
under applicable law. In addition, describe any actions required by the 
credit risk manager, including whether notices are required to 
investors, rating agencies or other third parties, and any required 
percentage of a class or classes of asset-backed securities that is 
needed to require the credit risk manager to take action.
    (4) Disclose the manner and amount in which the credit risk manager 
is compensated.
    (5) Describe any limitations on the credit risk manager's liability 
under the transaction agreements regarding the asset-backed securities 
transaction.
    (6) Describe any contractual provisions or understandings regarding 
the credit risk manager's removal, replacement or resignation, as well 
as how the expenses associated with changing from one credit risk 
manager to another credit risk manager will be paid.
    6. Amend Sec.  229.1119 by adding paragraph (a)(7) to read as 
follows:


Sec.  229.1119  (Item 1119) Affiliations and certain relationships and 
related transactions.

* * * * *
    (a) * * *
    (7) Credit risk manager.
* * * * *
    7. Amend Sec.  229.1121 by adding reserved paragraphs (d) and (e) 
and adding paragraphs (f) and (g) to read as follows:


Sec.  229.1121  (Item 1121) Distribution and pool performance 
information.

* * * * *
    (d) [Reserved].
    (e) [Reserved].
    (f) Credit risk manager. (1) Review by credit risk manager. If 
during the distribution period a credit risk manager is required to 
review the underlying assets for compliance with the representations 
and warranties on the underlying assets, provide the following 
information, as applicable:
    (i) A description of the event(s) that triggered the review by the 
credit risk manager during the distribution period.
    (ii) If the credit risk manager provided to the trustee during the 
distribution period a report of the findings and conclusions of its 
review of assets, file the full report as an exhibit to the Form 10-D.
    (2) Change in credit risk manager. If during the distribution 
period a credit risk manager has resigned or has been removed, replaced 
or substituted, or if a new credit risk manager has been appointed, 
state the date the event occurred and the circumstances surrounding the 
change. If a new credit risk manager has been appointed, provide the 
disclosure required by Item 1109(b) (17 CFR 229.1109(b)), as 
applicable, regarding such credit risk manager.
    (g) Investor communication. Disclose any request received from an 
investor to communicate with other investors during the reporting 
period received by the party responsible for making the Form 10-D 
filings on or before the end date of a distribution period. The 
disclosure regarding the request to communicate is required to include 
the name of the investor making the request, the date the request was 
received, and

[[Page 47979]]

a description of the method by which other investors may contact the 
requesting investor.
    Instruction to paragraph (g). An investor would not be permitted to 
use the ability to request to communicate with other investors as a 
mechanism to communicate for purposes other than those related to 
investors exercising their rights under the terms of the asset-backed 
security.

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

    8. The authority citation for Part 230 continues to read, in part, 
as follows:

    Authority:  15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 
77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78t, 78w, 
78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, 
unless otherwise noted.
* * * * *
    9. Amend Sec.  230.401 by:
    a. Revising in paragraph (g)(1) the phrase ``and (g)(3)'' to read 
``, (g)(3), and (g)(4)''; and
    b. Adding paragraph (g)(4).
    The addition reads as follows:


Sec.  230.401  Requirements as to proper form.

* * * * *
    (g) * * *
    (4) Notwithstanding that the registration statement may have become 
effective previously, requirements as to proper form under this section 
will have been violated for any offering of securities where the 
requirements of General Instruction I.A. of Form SF-3 has not been met 
as of ninety days after the end of the depositor's fiscal year end 
prior to such offering.
    10. Amend Sec.  230.415 by revising paragraph (a)(1)(vii):


Sec.  230.415  Delayed or continuous offering and sale of securities.

    (a) * * *
    (1) * * *
    (vii) Asset-backed securities (as defined in 17 CFR 229.1101) 
registered (or qualified to be registered) on Form SF-3 (Sec.  239.45 
of this chapter) which are to be offered and sold on an immediate or 
delayed basis by or on behalf of the registrant;
    Instructions to paragraph (a)(1)(vii): The requirements of General 
Instruction I.B.1 of Form SF-3 (Sec.  239.45 of this chapter) must be 
met for any offerings of an asset-backed security (as defined in 17 CFR 
229.1101) registered in reliance on paragraph (a)(1)(vii).
* * * * *

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

    11. The authority citation for Part 239 continues to read in part 
as follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 
77sss, 78c, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll, 78mm, 80a-
2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 
80a-30, and 80a-37, unless otherwise noted.
* * * * *
    12. Add Sec.  239.45 to read as follows:


Sec.  239.45  Form SF-3, for registration under the Securities Act of 
1933 of asset-backed securities offered pursuant to certain types of 
transactions.

    This form may be used for registration under the Securities Act of 
1933 (``Securities Act'') of offerings of asset-backed securities, as 
defined in 17 CFR 229.1101(c). Any registrant which meets the 
requirements of paragraph (a) of this section may use this Form for the 
registration of asset-backed securities (as defined in 17 CFR 
229.1101(c)) under the Securities Act which are offered in any 
transaction specified in paragraph (b) of this section provided that 
the requirement applicable to the specified transaction are met. Terms 
used have the same meaning as in Item 1101 of Regulation AB.
    (a) Registrant requirements. Registrants must meet the following 
conditions in order to use this Form for registration under the 
Securities Act of asset-backed securities offered in the transactions 
specified in paragraph (b) of this section:
    (1) To the extent the depositor or any issuing entity previously 
established, directly or indirectly, by the depositor or any affiliate 
of the depositor (as defined in Item 1101 of Regulation AB (17 CFR 
229.1101)) is or was at any time during the twelve calendar months and 
any portion of a month immediately preceding the filing of the 
registration statement on this Form required to comply with the 
transaction requirements in paragraphs (b)(1)(i) through (iii) of this 
section with respect to a previous offering of asset-backed securities 
involving the same asset class, the following requirements shall apply:
    (i) Such depositor and each such issuing entity must have filed on 
a timely basis all certifications required by paragraph (b)(1)(i) of 
this section; and
    (ii) Such depositor and each such issuing entity must have filed on 
a timely basis all transaction agreements containing the provisions 
that are required by paragraphs (b)(1)(ii) and (iii) of this section.
    (iii) If such depositor and issuing entity fail to meet the 
requirements of paragraphs (a)(1)(i) and (ii) of this section, such 
depositor and issuing entity will be deemed to satisfy such 
requirements for purposes of this Form 90 days after the date it files 
the information required by paragraphs (a)(1)(i) and (ii).
    Instruction to (a)(1). The registrant must provide disclosure in a 
prospectus that is part of the registration statement that it has met 
the registrant requirements of paragraph (a)(1) of this section.
    (2) To the extent the depositor or any issuing entity previously 
established, directly or indirectly, by the depositor or any affiliate 
of the depositor (as defined in Item 1101 of Regulation AB (17 CFR 
229.1101)) is or was at any time during the twelve calendar months and 
any portion of a month immediately preceding the filing of the 
registration statement on this Form subject to the requirements of 
section 12 or 15(d) of the Exchange Act (15 U.S.C. 78l or 78o(d)) with 
respect to a class of asset-backed securities involving the same asset 
class, such depositor and each such issuing entity must have filed all 
material required to be filed regarding such asset-backed securities 
pursuant to section 13, 14 or 15(d) of the Exchange Act (15 U.S.C. 78m, 
78n or 78o(d)) for such period (or such shorter period that each such 
entity was required to file such materials). In addition, such material 
must have been filed in a timely manner, other than a report that is 
required solely pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05, 2.06, 
4.02(a), 6.01, or 6.03 of Form 8-K (17 CFR 249.308). If Rule 12b-25(b) 
(17 CFR 240.12b-25(b)) under the Exchange Act was used during such 
period with respect to a report or a portion of a report, that report 
or portion thereof has actually been filed within the time period 
prescribed by that rule. Regarding an affiliated depositor that became 
an affiliate as a result of a business combination transaction during 
such period, the filing of any material prior to the business 
combination transaction relating to asset-backed securities of an 
issuing entity previously established, directly or indirectly, by such 
affiliated depositor is excluded from this section, provided such 
business combination transaction was not part of a plan or scheme to 
evade the requirements of the Securities Act or the Exchange Act. See 
the definition of ``affiliate'' in Securities Act Rule 405 (17 CFR 
230.405).
    (b) Transaction Requirements. If the registrant meets the 
registrant requirements specified in paragraph (a) above, an offering 
meeting the following conditions may be registered on Form SF-3:

[[Page 47980]]

    (1) Asset-backed securities (as defined in 17 CFR 229.1101) to be 
offered for cash where the following have been satisfied:
    (i) Certification. The registrant files a certification in 
accordance with Item 601(b)(36) of Regulation S-K (Sec.  
229.601(b)(36)) signed by the chief executive officer of the depositor 
or executive officer in charge of securitization of the depositor with 
respect to each offering of securities that is registered on this form.
    (ii) Appointment of a credit risk manager and repurchase request 
dispute resolution provisions. With respect to each offering of 
securities that is registered on this form, the pooling and servicing 
agreement or other transaction agreement, which shall be filed, must 
provide for the following:
    (A) The selection and appointment by the trustee of the issuing 
entity of a credit risk manager that is not affiliated with any 
sponsor, depositor, or servicer of the transaction;
    (B) The credit risk manager shall have authority to access copies 
of the underlying documents related to the pool assets;
    (C) The credit risk manager shall be responsible for reviewing the 
underlying assets for compliance with the representations and 
warranties on the underlying pool assets. Reviews shall be required, at 
a minimum, when the requirments of either paragraphs (b)(1)(ii)(C)(1) 
or (2) of this section are met:
    (1) The credit enhancement requirements, as specified in the 
underlying transaction agreements, are not met; or
    (2) At the direction of investors, pursuant to the processes 
provided in the transaction agreement and disclosed in the prospectus.
    (C) The credit risk manager shall provide a report to the trustee 
of the findings and conclusions of the review of the assets.
    (D) If an asset subject to a repurchase request, pursuant to the 
terms of the transaction agreements, is not repurchased by the end of a 
180-day period beginning when notice is received, then the party 
submitting such repurchase request shall have the right to refer the 
matter, at its discretion, to either mediation or third-party 
arbitration, and the party obligated to repurchase must agree to the 
selected resolution method.
    (iii) Investor communication provision. With respect to each 
offering of securities that is registered on this form, the pooling and 
servicing agreement or other transaction agreement, which shall be 
filed, contains a provision requiring that the party responsible for 
making periodic filings on Form 10-D (Sec.  249.312) include any 
request received from an investor to communicate with other investors 
during the reporting period related to investors exercising their 
rights under the terms of the asset-backed security. The request to 
communicate, would be required to include the name of the investor 
making the request; the date the request was received; and a 
description of the method by which other investors may use to contact 
the requesting investor.
    Instruction to (b)(1)(iii) If an underlying transaction agreement 
contains procedures in order to verify that an investor is, in fact, a 
beneficial owner, the verification procedures may require no more than 
the following:
    (1) If the investor is a record holder of the securities at the 
time of a request to communication, then the investor would not have to 
provide verification of ownership, and
    (2) If the investor is not the record holder of the securities, 
then the person obligated to make the disclosure must receive a written 
statement from the record holder verifying that, at the time the 
request is submitted, that the investor beneficially holds the 
securities.
    (iv) Delinquent assets. Delinquent assets do not constitute 20% or 
more, as measured by dollar volume, of the asset pool as of the 
measurement date.
    (v) Residual value for certain securities. With respect to 
securities that are backed by leases other than motor vehicle leases, 
the portion of the securitized pool balance attributable to the 
residual value of the physical property underlying the leases, as 
determined in accordance with the transaction agreements for the 
securities, does not constitute 20% or more, as measured by dollar 
volume, of the securitized pool balance as of the measurement date.
    (2) Securities relating to an offering of asset-backed securities 
registered in accordance with paragraph (b)(1) of this section where 
those securities represent an interest in or the right to the payments 
of cash flows of another asset pool and meet the requirements of 
Securities Act Rule 190(c)(1) through (4) (17 CFR 240.190(c)(1) through 
(4)).
    59. Add Form SF-3 (referenced in Sec.  239.45) to read as follows:

    Note:  The text of Form SF-3 does not, and this amendment will 
not, appear in the Code of Federal Regulations.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM SF-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

-----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

-----------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)

-----------------------------------------------------------------------
(I.R.S. Employer Identification Number)--------------------------------

Commission File Number of deposi- tor:---------------------------------

Central Index Key Number of deposi- tor:-------------------------------

-----------------------------------------------------------------------
(Exact name of depositor as specified in its charter)

Central Index Key Number of sponsor (if available):--------------------

-----------------------------------------------------------------------
(Exact name of sponsor as specified in its charter)

-----------------------------------------------------------------------
(Address, including zip code, and telephone number, including area 
code, of registrant's principal executive offices)

-----------------------------------------------------------------------
(Name, address, including zip code, and telephone number, including 
area code, of agent for service)

-----------------------------------------------------------------------
(Approximate date of commencement of proposed sale to the public)

    If any of the securities being registered on this Form SF-3 are to 
be offered on a delayed basis pursuant to Rule 415 under the Securities 
Act of 1933, check the following box: [ ]
    If this Form SF-3 is filed to register additional securities for an 
offering pursuant to Rule 462(b) under the Securities Act, please check 
the following box and list the Securities Act registration statement 
number of the earlier effective registration statement for the same 
offering: [ ]
    If this Form SF-3 is a post-effective amendment filed pursuant to 
Rule 462(c) under the Securities Act, check the following box and list 
the Securities Act registration statement number of the earlier 
effective registration statement for the same offering: [ ]

[[Page 47981]]



                                         Calculation of Registration Fee
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Title of each class    Amount to be           Proposed maximum       Proposed maximum       Amount of
 of securities to be    registered             offering price per     aggregate offering     registration fee.
 registered                                    unit                   price
----------------------------------------------------------------------------------------------------------------

Notes to the ``Calculation of Registration Fee'' Table (``Fee Table''):

    1. Specific details relating to the fee calculation shall be 
furnished in notes to the Fee Table, including references to provisions 
of Rule 457 (Sec.  230.457 of this chapter) relied upon, if the basis 
of the calculation is not otherwise evident from the information 
presented in the Fee Table.
    2. If the filing fee is calculated pursuant to Rule 457(r) under 
the Securities Act, the Fee Table must state that it registers an 
unspecified amount of securities of each identified class of securities 
and must provide that the issuer is relying on Rule 456(b) and Rule 
457(r). If the Fee Table is amended in a post-effective amendment to 
the registration statement or in a prospectus filed in accordance with 
Rule 456(b)(1)(ii) (Sec.  230.456(b)(1)(ii) of this chapter), the Fee 
Table must specify the aggregate offering price for all classes of 
securities in the referenced offering or offerings and the applicable 
registration fee.
    3. Any difference between the dollar amount of securities 
registered for such offerings and the dollar amount of securities sold 
may be carried forward on a future registration statement pursuant to 
Rule 457 under the Securities Act.

GENERAL INSTRUCTIONS

I. Eligibility Requirements for Use of Form SF-3.

    This instruction sets forth registrant requirements and transaction 
requirements for the use of Form SF-3. Any registrant which meets the 
requirements of I.A. below (``Registrant Requirements'') may use this 
Form for the registration of asset-backed securities (as defined in 17 
CFR 229.1101(c)) under the Securities Act of 1933 (``Securities Act'') 
which are offered in any transaction specified in I.B. below 
(``Transaction Requirement'') provided that the requirement applicable 
to the specified transaction are met. Terms used in this form have the 
same meaning as in Item 1101 of Regulation AB.
    A. Registrant Requirements. Registrants must meet the following 
conditions in order to use this Form SF-3 for registration under the 
Securities Act of asset-backed securities offered in the transactions 
specified in I.B. below:
    1. To the extent the depositor or any issuing entity previously 
established, directly or indirectly, by the depositor or any affiliate 
of the depositor (as defined in Item 1101 of Regulation AB (17 CFR 
229.1101)) is or was at any time during the twelve calendar months and 
any portion of a month immediately preceding the filing of the 
registration statement on this Form required to comply with the 
transaction requirements in General Instructions I.B.1(a), I.B.1(b), 
and I.B.1(c) of this form with respect to a previous offering of asset-
backed securities involving the same asset class, the following 
requirements shall apply:
    (a) Such depositor and each such issuing entity must have filed on 
a timely basis all certifications required by I.B.1(a); and
    (b) Such depositor and each such issuing entity must have filed on 
a timely basis all transaction agreements containing the provisions 
that are required by I.B.1(b) and I.B.1(c);
    If such depositor and issuing entity fail to meet the requirements 
of I.A.1(a) and I.A.1(b), such depositor and issuing entity will be 
deemed to satisfy such requirements for purposes of this Form SF-3 90 
days after the date it files the information required by I.A.1(a) and 
I.A.1(b).
    Instruction to General Instruction I.A.1: The registrant must 
provide disclosure in a prospectus that is part of the registration 
statement that it has met the registrant requirements of I.A.1.
    2. To the extent the depositor or any issuing entity previously 
established, directly or indirectly, by the depositor or any affiliate 
of the depositor (as defined in Item 1101 of Regulation AB (17 CFR 
229.1101)) is or was at any time during the twelve calendar months and 
any portion of a month immediately preceding the filing of the 
registration statement on this Form SF-3 subject to the requirements of 
section 12 or 15(d) of the Exchange Act (15 U.S.C. 78l or 78o(d)) with 
respect to a class of asset-backed securities involving the same asset 
class, such depositor and each such issuing entity must have filed all 
material required to be filed regarding such asset-backed securities 
pursuant to section 13, 14 or 15(d) of the Exchange Act (15 U.S.C. 78m, 
78n or 78o(d)) for such period (or such shorter period that each such 
entity was required to file such. In addition, such material must have 
been filed in a timely manner, other than a report that is required 
solely pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05, 2.06, 4.02(a), 
6.01, or 6.03 of Form 8-K (17 CFR 249.308). If Rule 12b-25(b) (17 CFR 
240.12b-25(b)) under the Exchange Act was used during such period with 
respect to a report or a portion of a report, that report or portion 
thereof has actually been filed within the time period prescribed by 
that rule. Regarding an affiliated depositor that became an affiliate 
as a result of a business combination transaction during such period, 
the filing of any material prior to the business combination 
transaction relating to asset-backed securities of an issuing entity 
previously established, directly or indirectly, by such affiliated 
depositor is excluded from this section, provided such business 
combination transaction was not part of a plan or scheme to evade the 
requirements of the Securities Act or the Exchange Act. See the 
definition of ``affiliate'' in Securities Act Rule 405 (17 CFR 
230.405).
    B. Transaction Requirements. If the registrant meets the Registrant 
Requirements specified in I.A. above, an offering meeting the following 
conditions may be registered on this Form:
    1. Offerings for cash where the following have been satisfied:
    (a) Certification. The registrant files a certification in 
accordance with Item 601(b)(36) of Regulation S-K (Sec.  
229.601(b)(36)) signed by the chief executive officer of the depositor 
or executive officer in charge of securitization of the depositor with 
respect to each offering of securities that is registered on this form.
    (b) Appointment of a credit risk manager and repurchase request 
dispute resolution provisions. With respect to each offering of 
securities that is registered on this form, the pooling and servicing 
agreement or other transaction agreement, which shall be filed, must 
provide for the following:
    (A) The selection and appointment by the trustee of the issuing 
entity of a credit risk manager that is not affiliated with any 
sponsor, depositor, or servicer of the transaction;
    (B) The credit risk manager shall have authority to access copies 
of the underlying documents related to the pool assets;
    (C) The credit risk manager shall be responsible for reviewing the

[[Page 47982]]

underlying assets for compliance with the representations and 
warranties on the underlying pool assets. Reviews shall be required, at 
a minimum, when either (a) or (b) are met:
    (a) The credit enhancement requirements, as specified in the 
underlying transaction agreements, are not met; or
    (b) At the direction of investors, pursuant to the processes 
provided in the transaction agreement and disclosed in the prospectus.
    (D) The credit risk manager shall provide a report to the trustee 
of the findings and conclusions of the review of the assets.
    (E) If an asset subject to a repurchase request, pursuant to the 
terms of the transaction agreements, is not repurchased by the end of a 
180-day period beginning when notice is received, then the party 
submitting such repurchase request shall have the right to refer the 
matter, at its discretion, to either mediation or third-party 
arbitration, and the party obligated to repurchase must agree to the 
selected resolution method.
    (c) Investor Communication Provision. With respect to each offering 
of securities that is registered on this form, the pooling and 
servicing agreement or other transaction agreement, which shall be 
filed, contains a provision requiring that the party responsible for 
making periodic filings on Form 10-D (Sec.  249.312) include any 
request received from an investor to communicate with other investors 
during the reporting period related to investors exercising their 
rights under the terms of the asset-backed security. The request to 
communicate would be required to include the name of the investor 
making the request, the date the request was received, and a 
description of the method other investors may use to contact the 
requesting investor.
    Instruction to I.B.1(c) If an underlying transaction agreement 
contains procedures in order to verify that an investor is, in fact, a 
beneficial owner, the verification procedures may require no more than 
the following: (1) if the investor is a record holder of the securities 
at the time of a request to communication, then the investor would not 
have to provide verification of ownership, and (2) if the investor is 
not the record holder of the securities, then the person obligated to 
make the disclosure must receive a written statement from the record 
holder verifying that, at the time the request is submitted, that the 
investor beneficially holds the securities.
    (d) Delinquent assets. Delinquent assets do not constitute 20% or 
more, as measured by dollar volume, of the asset pool as of the 
measurement date.
    (e) Residual value for certain securities. With respect to 
securities that are backed by leases other than motor vehicle leases, 
the portion of the securitized pool balance attributable to the 
residual value of the physical property underlying the leases, as 
determined in accordance with the transaction agreements for the 
securities, does not constitute 20% or more, as measured by dollar 
volume, of the securitized pool balance as of the measurement date.
    2. Securities relating to an offering of asset-backed securities 
registered in accordance with General Instruction I.B.1. where those 
securities represent an interest in or the right to the payments of 
cash flows of another asset pool and meet the requirements of 
Securities Act Rule 190(c)(1) through (4) (17 CFR 240.190(c)(1) through 
(4)).

II. Application of General Rules and Regulations.

    A. Attention is directed to the General Rules and Regulations under 
the Securities Act, particularly Regulation C thereunder (l7 CFR 
230.400 to 230.494). That Regulation contains general requirements 
regarding the preparation and filing of registration statements.
    B. Attention is directed to Regulation S-K (17 CFR part 229) for 
the requirements applicable to the content of the non-financial 
statement portions of registration statements under the Securities Act. 
Where this Form SF-3 directs the registrant to furnish information 
required by Regulation S-K and the item of Regulation S-K so provides, 
information need only be furnished to the extent appropriate. 
Notwithstanding Items 501 and 502 of Regulation S-K, no table of 
contents is required to be included in the prospectus or registration 
statement prepared on this Form SF-3. In addition to the information 
expressly required to be included in a registration statement on this 
Form SF-3, registrants also may provide such other information as they 
deem appropriate.
    C. Where securities are being registered on this Form SF-3, Rule 
456(c) permits, but does not require, the registrant to pay the 
registration fee on a pay-as-you-go basis and Rule 457(s) permits, but 
does not require, the registration fee to be calculated on the basis of 
the aggregate offering price of the securities to be offered in an 
offering or offerings off the registration statement. If a registrant 
elects to pay all or a portion of the registration fee on a deferred 
basis, the Fee Table in the initial filing must identify the classes of 
securities being registered and provide that the registrant elects to 
rely on Rule 456(c) and Rule 457(s), but the Fee Table does not need to 
specify any other information. When the registrant amends the Fee Table 
in accordance with Rule 456(c)(1)(ii), the amended Fee Table must 
include either the dollar amount of securities being registered if paid 
in advance of or in connection with an offering or offerings or the 
aggregate offering price for all classes of securities referenced in 
the offerings and the applicable registration fee.
    D. Information is only required to be furnished as of the date of 
initial effectiveness of the registration statement to the extent 
required by Rule 430D. Required information about a specific 
transaction must be included in the prospectus in the registration 
statement by means of a prospectus that is deemed to be part of and 
included in the registration statement pursuant to Rule 430D, a post-
effective amendment to the registration statement, or a periodic or 
current report under the Exchange Act incorporated by reference into 
the registration statement and the prospectus and identified in a 
prospectus filed, as required by Rule 430D, pursuant to Rule 424(h) or 
Rule 424(b) (Sec.  230.424(h) or Sec.  230.424(b) of this chapter).
    III. Registration of Additional Securities Pursuant to Rule 462(b). 
With respect to the registration of additional securities for an 
offering pursuant to Rule 462(b) under the Securities Act, the 
registrant may file a registration statement consisting only of the 
following: the facing page; a statement that the contents of the 
earlier registration statement, identified by file number, are 
incorporated by reference; required opinions and consents; the 
signature page; and any price-related information omitted from the 
earlier registration statement in reliance on Rule 430A that the 
registrant chooses to include in the new registration statement. The 
information contained in such a Rule 462(b) registration statement 
shall be deemed to be a part of the earlier registration statement as 
of the date of effectiveness of the Rule 462(b) registration statement. 
Any opinion or consent required in the Rule 462(b) registration 
statement may be incorporated by reference from the earlier 
registration statement with respect to the offering, if: (i) such 
opinion or consent expressly provides for such incorporation; and (ii) 
such opinion relates to the securities registered pursuant to Rule 
462(b). See

[[Page 47983]]

Rule 411(c) and Rule 439(b) under the Securities Act.
    IV. Registration Statement Requirements. Include only one form of 
prospectus for the asset class that may be securitized in a takedown of 
asset-backed securities under the registration statement. A separate 
form of prospectus and registration statement must be presented for 
each country of origin or country of property securing pool assets that 
may be securitized in a discrete pool in a takedown of asset-backed 
securities. For both separate asset classes and jurisdictions of origin 
or property, a separate form of prospectus is not required for 
transactions that principally consist of a particular asset class or 
jurisdiction which also describe one or more potential additional asset 
classes or jurisdictions, so long as the pool assets for the additional 
classes or jurisdictions in the aggregate are below 10% of the pool, as 
measured by dollar volume, for any particular takedown.

PART I

INFORMATION REQUIRED IN PROSPECTUS

Item 1. Forepart of the Registration Statement and Outside Front Cover 
Pages of Prospectus

    Set forth in the forepart of the registration statement and on the 
outside front cover page of the prospectus the information required by 
Item 501 of Regulation S-K (17 CFR 229.501) and Item 1102 of Regulation 
AB (17 CFR 229.1102).

Item 2. Inside Front and Outside Back Cover Pages of Prospectus

    Set forth on the inside front cover page of the prospectus or, 
where permitted, on the outside back cover page, the information 
required by Item 502 of Regulation S-K (17 CFR 229.502).

Item 3. Transaction Summary and Risk Factors

    Furnish the information required by Item 503 of Regulation S-K (17 
CFR 229.503) and Item 1103 of Regulation AB (17 CFR 229.1103).

Item 4. Use of Proceeds

    Furnish the information required by Item 504 of Regulation S-K (17 
CFR 229.504).

Item 5. Plan of Distribution

    Furnish the information required by Item 508 of Regulation S-K (17 
CFR 229.508).

Item 6. Information with Respect to the Transaction Parties

    Furnish the following information:
    (a) Information required by Item 1104 of Regulation AB (17 CFR 
229.1104), Sponsors;
    (b) Information required by Item 1106 of Regulation AB (17 CFR 
229.1106), Depositors;
    (c) Information required by Item 1107 of Regulation AB (17 CFR 
229.1107), Issuing entities;
    (d) Information required by Item 1108 of Regulation AB (17 CFR 
229.1108), Servicers;
    (e) Information required by Item 1109 of Regulation AB (17 CFR 
229.1109), Trustees;
    (f) Information required by Item 1110 of Regulation AB (17 CFR 
229.1110), Originators;
    (g) Information required by Item 1112 of Regulation AB (17 CFR 
229.1112), Significant Obligors;
    (h) Information required by Item 1117 of Regulation AB (17 CFR 
229.1117), Legal Proceedings; and
    (i) Information required by Item 1119 of Regulation AB (17 CFR 
229.1119), Affiliations and certain relationships and related 
transactions.

Item 7. Information with Respect to the Transaction

    Furnish the following information:
    (a) Information required by Item 1111 of Regulation AB (17 CFR 
229.1111), Pool Assets and Item 1111A of Regulation AB (17 CFR 
229.1111A), Asset-level information, and Item 1111B of Regulation AB 
(17 CFR 229.1111B), Grouped account data for credit card pools;
    (b) Information required by Item 202 of Regulation S-K (17 CFR 
229.202), Description of Securities Registered and Item 1113 of 
Regulation AB (17 CFR 229.1113), Structure of the Transaction;
    (c) Information required by Item 1114 of Regulation AB (17 CFR 
229.1114), Credit Enhancement and Other Support;
    (d) Information required by Item 1115 of Regulation AB (17 CFR 
229.1115), Certain Derivatives Instruments;
    (e) Information required by Item 1116 of Regulation AB (17 CFR 
229.1116), Tax Matters;
    (f) Information required by Item 1118 of Regulation AB (17 CFR 
229.1118), Reports and additional information; and
    (g) Information required by Item 1120 of Regulation AB (17 CFR 
229.1120), Ratings.
    Instruction: All registrants are required to file the information 
required by Item 1111A of Regulation AB (17 CFR 229.1111A), Asset-level 
information; Item 1111B of Regulation AB (17 CFR 229.1111B), Grouped 
account data for credit card pools; and Item 1113(h) of Regulation AB 
(17 CFR 229.1113(h)), Waterfall Computer Program; as exhibits to Form 
8-K (17 CFR 249.308) that are filed with the Commission pursuant to 
Item 6.06 and Item 6.07, respectively, of that form. Incorporation by 
reference must comply with Item 11 of this Form SF-3.

Item 8. Static Pool

    Furnish the information required by Item 1105 of Regulation AB (17 
CFR 229.1105).
    Instruction: Registrants may elect to file the information required 
by this item as an exhibit to Form 8-K (17 CFR 249.308) that is filed 
with the Commission pursuant to Item 6.08 of that form. Incorporation 
by reference must comply with Item 11 of this Form SF-3.

Item 9. Interests of Named Experts and Counsel

    Furnish the information required by Item 509 of Regulation S-K (17 
CFR 229.509).

Item 10. Incorporation of Certain Information by Reference.

    (a) The prospectus shall provide a statement that all current 
reports filed pursuant to Items 6.06, 6.07 and if applicable, 6.08 of 
Form 8-K pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange 
Act, prior to the termination of the offering shall be deemed to be 
incorporated by reference into the prospectus.
    (b) If the registrant is structured as a revolving asset master 
trust, the documents listed in (1) and (2) below shall be specifically 
incorporated by reference into the prospectus by means of a statement 
to that effect in the prospectus listing all such documents:
    (1) The registrant's latest annual report on Form 10-K (17 CFR 
249.310) filed pursuant to Section 13(a) or 15(d) of the Exchange Act 
that contains financial statements for the registrant's latest fiscal 
year for which a Form 10-K was required to be filed; and
    (2) all other reports filed pursuant to Section 13(a) or 15(d) of 
the Exchange Act since the end of the fiscal year covered by the annual 
report referred to in (1) above.
    (c) The prospectus shall also provide a statement regarding the 
incorporation of reference of Exchange Act reports prior to the 
termination of the offering pursuant to one of the following two ways:
    (1) a statement that all subsequently filed by the registrant 
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, 
prior to the termination of the offering shall be deemed to be 
incorporated by reference into the prospectus; or

[[Page 47984]]

    (2) a statement that all current reports on Form 8-K filed by the 
registrant pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 
Exchange Act, prior to the termination of the offering shall be deemed 
to be incorporated by reference into the prospectus.
    Instruction. Attention is directed to Rule 439 (17 CFR 230.439) 
regarding consent to use of material incorporated by reference.
    (d)(1) You must state
    (i) that you will provide to each person, including any beneficial 
owner, to whom a prospectus is delivered, a copy of any or all of the 
information that has been incorporated by reference in the prospectus 
but not delivered with the prospectus;
    (ii) that you will provide this information upon written or oral 
request;
    (iii) that you will provide this information at no cost to the 
requester; and
    (iv) the name, address, and telephone number to which the request 
for this information must be made.
    Note to Item 11(c)(1). If you send any of the information that is 
incorporated by reference in the prospectus to security holders, you 
also must send any exhibits that are specifically incorporated by 
reference in that information.
    (2) You must:
    (i) identify the reports and other information that you file with 
the SEC; and
    (ii) state that the public may read and copy any materials you file 
with the SEC at the SEC's Public Reference Room at 100 F Street, NE., 
Washington, DC 20549, between the hours of 10:00 a.m. and 3:00 p.m. 
State that the public may obtain information on the operation of the 
Public Reference Room by calling the SEC at 1-800-SEC-0330. If you are 
an electronic filer, state that the SEC maintains an Internet site that 
contains reports, proxy and information statements, and other 
information regarding issuers that file electronically with the SEC and 
state the address of that site (http://www.sec.gov). You are encouraged 
to give your Internet address, if available.

Item 11. Disclosure of Commission Position on Indemnification for 
Securities Act Liabilities.

    Furnish the information required by Item 510 of Regulation S-K (17 
CFR 229.510).

PART II--INFORMATION NOT REQUIRED IN PROSPECTUS

Item 12. Other Expenses of Issuance and Distribution.

    Furnish the information required by Item 511 of Regulation S-K (17 
CFR 229.511).

Item 13. Indemnification of Directors and Officers.

    Furnish the information required by Item 702 of Regulation S-K (17 
CFR 229.702).

Item 14. Exhibits.

    Subject to the rules regarding incorporation by reference, file the 
exhibits required by Item 601 of Regulation S-K (17 CFR 229.601).

Item 15. Undertakings.

    Furnish the undertakings required by Item 512 of Regulation S-K (17 
CFR 229.512).

SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, the 
registrant certifies that it has reasonable grounds to believe that it 
meets all of the requirements for filing on Form SF-3 and has duly 
caused this registration statement to be signed on its behalf by the 
undersigned, thereunto duly authorized, in the City of ----------------
, State of ----------------, on ------------,


 20----.---------------------------------------------------------------
(Registrant)

By---------------------------------------------------------------------
(Signature and Title)

    Pursuant to the requirements of the Securities Act of 1933, this 
registration statement has been signed by the following persons in the 
capacities and on the dates indicated.
-----------------------------------------------------------------------
(Signature)
-----------------------------------------------------------------------
(Title)

-----------------------------------------------------------------------
(Date)

Instructions

    l. The registration statement shall be signed by the depositor, the 
depositor's principal executive officer or officers, its principal 
financial officer, its senior officer in charge of securitization and 
by at least a majority of its board of directors or persons performing 
similar functions. If the registrant is a foreign person, the 
registration statement shall also be signed by its authorized 
representative in the United States. Where the registrant is a limited 
partnership, the registration statement shall be signed by a majority 
of the board of directors of any corporate general partner signing the 
registration statement.
    2. The name of each person who signs the registration statement 
shall be typed or printed beneath his signature. Any person who 
occupies more than one of the specified positions shall indicate each 
capacity in which he signs the registration statement. Attention is 
directed to Rule 402 concerning manual signatures and to Item 601 of 
Regulation S-K concerning signatures pursuant to powers of attorney.
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    13. The authority citation for part 249 continues to read in part 
as follows:

    Authority: 15 U.S.C. 78a et seq., 7201 et seq.; and 18 U.S.C. 
1350, unless otherwise noted.
* * * * *
    14. Amend Form 10-D (referenced in Sec.  249.312) by reserving Item 
1A in Part I and adding Item 1B in Part I as follows:

    Note: The text of Form 10-D does not, and this amendment will 
not, appear in the Code of Federal Regulations.

* * * * *

Item 1A. (Reserved)

Item 1B. Credit Risk Manager and Investor Communication.

    For any transaction that included the provisions required by 
General Instructions I.B.1(b) and I.B.1(c) on Form SF-3 (referenced in 
Sec.  239.45), provide the information required by Item 1121(f) and (g) 
of Regulation AB (17 CFR 229.1121(f) and (g)), as applicable.
* * * * *

    Dated: July 26, 2011.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-19300 Filed 8-4-11; 8:45 am]
BILLING CODE 8011-01-P


