The SEC's definition for asset-backed securities is the same basic definition that has existed since 1992, with the addition of a modification with respect to leases. The SEC is also requiring that all registered offerings of asset-backed securities be registered on either Form S-1 or Form S-3. The definition thus consists of the following:

"a security that is primarily serviced by the cash flows of a discrete pool of receivables or other financial assets, either fixed or revolving, that by their terms convert into cash within a finite time period, plus any rights or other assets designed to assure the servicing or timely distributions of proceeds to the security holders; provided that in the case of financial assets that are leases, those assets may convert to cash partially by the cashed proceeds from the disposition of the physical property underlying such leases." (1)

The SEC adopted a principles based definition for ABS which allows broad flexibility as to what asset types fall under the regulatory mandates for Regulation AB. To date, the most common affected asset types will typically be residential mortgages, home equity, commercial mortgages, credit card receivables, automobile loans, automobile and equipment leases, along with student loans. This is without question an extraordinary far-reaching scope and will certainly be felt for years to come in regards to Regulation AB compliance.

(1) Securities and Exchange Commission 17 CFR Parts 210, 228, et al. Asset Backed Securities: Final Rule