Release No. 33-8419

Release No. 34-49644

69 Fed. Reg. 26649 - May 13, 2004 

69 Fed. Reg. 30750 - May 28, 2004 (Correction) 

ASSET-BACKED SECURITIES
Action: Proposed Rule

Section IV - Paperwork Reduction Act

Section V - Cost-Benefit Analysis

Section VI - Consideration of Burden

Section VII - Regulatory Flexibility Analysis Certification

Table of Contents

IV. Paperwork Reduction Act

A. Background

Our proposals contain "collection of information" requirements within the meaning of the Paperwork Reduction Act of 1995 ("PRA").²⁹⁷ We are submitting our proposals to the Office of Management and Budget ("OMB") for review in accordance with the PRA.²⁹⁸ The titles for the collection of information are:

(1) "Form S-1" (OMB Control No. 3235-0065);

(2) "Form S-3" (OMB Control No. 3235-0073);

(3) "Form S-11" (OMB Control No. 3235-0067);

(4) "Form 10-K" (OMB Control No. 3235-0063);

(5) "Form 8-K" (OMB Control No. 3235-0288);

(6) "Regulation S-K" (OMB Control No. 3235-0071); and

(7) "Form 10-D" (a proposed new collection of information).

The regulations and forms listed as Items (1)-(6) were adopted pursuant to the Securities Act and the Exchange Act and set forth the disclosure requirements for registration statements, periodic reports and current reports filed with respect to asset-backed securities and other types of securities to ensure that investors are informed. Form 10-D, if adopted, would represent a new form type for distribution reports currently filed under cover of Form 8-K under the modified reporting system for asset-backed securities, or ABS. The hours and costs associated with preparing, filing and sending these forms constitute reporting and cost burdens imposed by each collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. We are proposing to address comprehensively the registration, disclosure and reporting requirements for asset-backed securities under the Securities Act and the Exchange Act. This includes providing tailored disclosure requirements and guidance for Securities Act and Exchange Act filings involving asset-backed securities. This information is needed so that security holders can make informed investment decisions regarding asset-backed securities. ABS issuers and ABS differ from operating companies and their securities. Many of the Commissions existing disclosure and reporting requirements applicable to operating companies generally do not elicit information that is relevant for ABS transactions. Through the staff filing review process and, where necessary, through staff no-action letters and interpretive statements, an informal disclosure and reporting scheme has developed taking into account evolving industry practices.

With some exceptions noted below, our proposals consolidate and codify current staff positions and industry practice. We propose a new principles-based set of disclosure items, "Regulation AB," as a sub-part of Regulation S-K that would form the basis for disclosure in both Securities Act registration statements and Exchange Act reports. Amendments to the forms referenced above (other than Form S-11) would specify the menu of disclosure items that apply to asset-backed securities, including items contained in new Regulation AB and a limited number of pre-existing disclosure requirements identified in the forms.²⁹⁹

These disclosure changes are designed to establish a tailored disclosure system for asset-backed securities offerings. Compliance with the revised disclosure requirements would be mandatory. There would be no mandatory retention period for the information disclosed, and responses to the disclosure requirements would not be kept confidential.

B. Revisions to PRA Reporting and Cost Burden Estimates

Our existing PRA burden estimates for each of the affected collections of information are based on an average of the time and cost incurred by all types of public companies, not just ABS issuers, to prepare a particular information collection. As noted above, however, the existing disclosure and reporting system with respect to ABS that we propose to codify recognizes that information relevant to ABS differs substantially from that relevant to other securities. For each information collection discussed below, we first estimate the average number of hours that an ABS issuer currently spends to complete one of the listed forms. We then estimate the incremental burden change that would result if the Commission adopted the proposed changes. The staff estimated the average number of hours each ABS issuer currently spends completing the form by contacting a number of issuers and other persons regularly involved in completing the forms.

Each entity that files reports with the Commission is assigned a Standard Industrial Classification (SIC) code to indicate the entitys type of business. SIC Code 6189 is used with respect to asset-backed securities. Entities assigned this SIC Code were used as a proxy for estimating the number of responses with respect to ABS issuers. In addition, unless otherwise specified below, all estimates of the number of responses are based on filings made during the Commissions 2003 fiscal year: October 1, 2002 through September 30, 2003.

1. Form S-3

Our current PRA burden estimate for Form S-3 is 398 hours per response. This estimate is based on the assumption that most disclosure regarding the issuer is incorporated by reference from separately required Exchange Act reports. However, because an Exchange Act reporting history is not an ABS condition for Form S-3 eligibility, ABS issuers using Form S-3 often must present all of their disclosure in the registration statement in lieu of incorporating it by reference. As a result, our burden estimate for ABS issuers using Form S-3 under existing requirements is similar to our Form S-1 burden estimate for asset-backed securities, given that all Form S-1 disclosure also must be provided in the form itself.

During our 2003 fiscal year, we received 168 Form S-3 filings related to asset-backed securities compared to 1,695 Form S-3 filings overall. We estimate that currently it takes an ABS issuer an average of 1,000 hours to prepare a Form S-3 for an ABS offering. We estimate that 25% of the burden is borne by the ABS issuer and that 75% of the burden is borne by outside professionals retained by the issuer at an average cost of $300 per hour.³⁰⁰

We propose to add a separate general instruction to Form S-3 to specify the disclosure to be provided with respect to ABS offerings. Our proposed disclosure requirements are based to a large extent on the disclosures that appear in ABS Form S-3 filings today. We do, however, propose to require a few additional items that may not appear in all ABS Form S-3 filings today. We preliminarily believe this information already should be readily available to issuers even if not currently disclosed, although some information would require additional attention and diligence before its use in a registration statement. For example, we propose to require delinquency and loss information to be provided on a static pool basis. While the information is, we believe, available, additional time and expense will be involved in including it in registration statements. Our proposals also are designed to elicit more disclosure regarding the background, experience, performance and roles of various transaction parties, including the sponsor, the servicer and the trustee. Other examples of disclosure that may be incremental include:

• How delinquencies and charge-offs are defined and determined;
   

• The use of prefunding periods, revolving periods and master trust structures;
   

• The realization of residual values in lease-backed ABS;
   

• The impact of differing legal and regulatory requirements in foreign ABS; and
   

• Fees and expenses, including a fee and expense table.
   

We estimate that completing and filing a Form S-3 if the new disclosure requirements are adopted would result in an average increase of approximately 25% to our estimate of the current Form S-3 reporting burden imposed on ABS issuers. As a result, we estimate that, on average, completing and filing a Form S-3 to register ABS if the new disclosure requirements were adopted would result in a burden of 1,250 hours, an increase of 250 hours per response over the current burden. Using our estimates of the percentages of the burden prepared by the issuer and outside professionals, we thus estimate that the proposals would result in an added annual burden of 10,500 hours (168 filings x 250 additional hours x .25) and an added annual cost of $9,450,000 (168 filings x 250 additional hours x .75 x $300 per hour).

2. Form S-1 and Form S-11

Our current PRA burden estimate for Form S-1 is 1,749 hours per response. Unlike Form S-3, this estimate is based on the assumption that all required disclosure is presented in the form. However, as noted above, like Form S-3, the disclosure provided with respect to a registered ABS offering currently differs from that provided with respect to operating companies.

During our 2003 fiscal year, we received 7 Form S-1 filings related to asset-backed securities compared to 247 Form S-1 filings overall. In addition, we received 18 filings on Form S-11 related to asset-backed securities. We are proposing to move all Securities Act registrations of ABS offerings to Form S-1 or Form S-3. Assuming that the filings on Form S-11 could not otherwise be conducted on Form S-3, we estimate that these filings would instead be made on Form S-1. Thus, we estimate that there would be 25 ABS offerings registered on Form S-1. We are correspondingly reducing our estimate of responses on Form S-11 by 18 responses.

For ABS filings on Form S-1, we are using the same estimate as for ABS filings on Form S-3, given that the disclosures in both filings are substantially similar.³⁰¹ Thus, we estimate that an ABS Form S-1 filing currently imposes a reporting burden of an average 1,000 hours per response. As with Form S-3, we estimate that 25% of the burden is borne by the ABS issuer and that 75% of the burden is borne by outside professionals retained by the issuer at an average cost of $300 per hour.

As with Form S-3, we propose to add a separate general instruction to Form S-1 to specify the disclosure to be provided with respect to ABS offerings. These disclosures would be substantially similar to those required for Form S-3 filings. As a result, we estimate that completing and filing a Form S-1 if the new disclosure requirements were adopted would result in an increase of approximately 25% over the amount of time currently spent by ABS issuers to complete and file the form. This results in a revised estimate of 1,250 hours per response, an increase of 250 hours per response over the current reporting burden. Using our estimates of the percentages of the burden prepared by the issuer and outside professionals, we thus estimate that the proposals would result in an added annual burden of 1,563 hours (25 filings x 250 additional hours x .25) and an added annual cost of $1,406,250 (25 filings x 250 additional hours x .75 x $300 per hour).

3. Form 10-K

Our current PRA burden estimate for Form 10-K is 2,196 hours per response. Similar to Securities Act registration statements, however, the ongoing periodic and current reporting requirements applicable to operating companies under the Exchange Act differ substantially from the reporting that is most relevant to investors in asset-backed securities. The Commission staff has developed a system of modified Exchange Act reporting for ABS issuers. This includes a modified annual report on Form 10-K involving a reduced amount of disclosure than for operating companies. In addition to a limited menu of Form 10-K disclosure items, the ABS issuer must file as exhibits to the Form 10-K a servicer compliance statement and a report by an independent public accountant. Asset-backed issuers are required to include a certification required by Section 302 of the Sarbanes-Oxley Act in their Form 10-K reports. The staff has provided a tailored form of certification for use with ABS annual reports that we now propose to codify, with minor revisions.

Based on filings in our 2003 fiscal year, we estimate 1,200 Form 10-K filings related to asset-backed securities.³⁰² Under the modified reporting system, we estimate that currently it takes an ABS issuer an average of 90 hours to prepare a Form 10-K. We estimate that 25% of the burden is borne by the ABS issuer and that 75% of the burden is borne by outside professionals retained by the issuer at an average cost of $300 per hour.

We propose to add a separate general instruction to Form 10-K to specify the disclosure to be provided with respect to ABS offerings. As with Securities Act registration statements, our proposed disclosure requirements are based on the disclosures that appear in ABS Form 10-K filings today. While the proposed disclosures are generally consistent with the disclosures provided today, the most significant difference between our proposed disclosure requirements and the average disclosure that appears today is with respect to the assessment of compliance with servicing criteria. The most common compliance framework being used today is the Mortgage Bankers Association of Americas Uniform Single Attestation Program, or USAP. Our proposed criteria are intended to be incrementally broader than the USAP criteria to cover the full spectrum of servicing activities. Our proposals also would require additional disclosure in the Form 10-K report if any material instances of noncompliance were identified.

Under these assumptions, we estimate that completing and filing a Form 10-K if the new disclosure requirements were adopted would result in an average increase of approximately 33% over the amount of time currently spent by entities completing the form. In deriving this estimate, we believe that many issuers will experience costs in excess of this average in the first year of compliance with the proposals. We believe that costs will decrease in subsequent years. This burden also will vary among issuers based on the complexity of the ABS transaction, the number of parties involved, especially servicers, and the nature and level of initial development of their compliance procedures. We have considered all of these factors in formulating our proposed estimates.

As a result, we estimate that, on average, completing and filing a Form 10-K if the new disclosure requirements are adopted would impose a reporting burden on ABS issuers of 120 hours, an increase of 30 hours over the current Form 10-K reporting burden for ABS issuers. Using our estimates of the percentages of the burden prepared by the issuer and outside professionals, we thus estimate that the proposals would result in an added annual burden of 9,000 hours (1,200 filings x 30 additional hours x .25) and an added annual cost of $8,100,000 (1,200 filings x 30 additional hours x .75 x $300 per hour).

We do not believe that the proposed amendments with respect to the Section 302 certification result in a need to alter the burden estimates. These amendments merely reflect conforming amendments already incorporated in the OMB burden estimates (e.g., relocating the certifications from the text of annual report to the "Exhibits" section of the report) and minor changes to the wording of the Section 302 certification that do not alter the burden estimates that we previously submitted to OMB.

4. Form 8-K

Our current PRA burden estimate for Form 8-K is 5 hours per response. This is based on the use of that report to disclose the occurrence of certain defined reportable events, some of which are applicable to asset-backed securities. However, under the existing modified reporting system, ABS issuers also use Form 8-K to file periodic distribution and pool performance information. To separate this reporting from the disclosure of current events, we propose one new form type for asset-backed securities, Form 10-D, to act as the report for the periodic distribution and pool performance information. Form 8-K would continue to prescribe certain reportable events that would require current disclosure by ABS issuers. Form 8-K also would continue to be available to report any events that an ABS issuer deems to be of importance to security holders.

During our 2003 fiscal year, we received 12,633 Form 8-K filings related to asset-backed securities compared to 58,421 Form 8-K filings overall. Based on filings in our 2003 fiscal year, we estimate 9,500 filings that would include distribution and pool performance information that would instead appear in Form 10-D under our proposals.³⁰³ Accordingly, assuming that our proposals are adopted, we estimate that there would be a decrease of 9,500 in the total number of Form 8-K filings.

We estimate that the time it takes to prepare a Form 8-K for a reportable event does not vary between an ABS and a non-ABS issuer. Thus, we estimate that an ABS issuer spends, on average, approximately 5 hours completing the form. As with our estimates for non-ABS issuers, we estimate that 75% of the burden is borne by the ABS issuer and that 25% of the burden is borne by outside professionals retained by the issuer at an average cost of $300 per hour.

We propose to add a separate general instruction to Form 8-K to specify the events that would require disclosure under that form. Several reportable events would be excluded with respect to ABS issuers, and a few additional events specific to asset-backed securities would be added. We also propose clarifying amendments to several existing reportable events to identify how they should apply to asset-backed securities.

We estimate that, on average, completing and filing a Form 8-K if the proposals were adopted would require the same amount of time currently spent by entities to complete the formapproximately 5 hours. We do estimate that the number of reportable events on Form 8-K would increase with respect to asset-backed securities as a result of the proposals. For purposes of the PRA, we estimate that the proposals would cause, on average, an increase of two reports on Form 8-K per ABS issuer per year. Based on our estimate of 1,200 ABS issuers, we estimate an increase of 2,400 Form 8-K filings per year. Using our estimates of the percentages of the burden prepared by the issuer and outside professionals, we thus estimate that the proposals would result in an added annual burden of 9,000 hours (2,400 filings x 5 hours x .75) and an added annual cost of $900,000 (2,400 filings x 5 hours x .25 x $300 per hour).

5. Proposed Form 10-D

As discussed above, proposed Form 10-D would be the new form type under which ABS issuers would file their periodic distribution and pool performance information. As discussed above, we estimate that there would be 9,500 Form 10-D filings per year. The proposed disclosure content for Form 10-D would consist of the distribution and pool performance information for the distribution period as well as certain non-financial disclosures, similar to those required by Part II of Form 10-Q, that occurred during the period. The requirement with respect to distribution and pool performance information would require the registrant to provide the information required by proposed Item 1119 of Regulation AB and to attach as an exhibit to the Form 10-D the distribution report delivered to the trustee or security holders, as the case may be, pursuant to the transaction agreements for the related distribution date. However, any information required by Item 1119 of Regulation AB that was included in the attached distribution report would not need to be repeated in the Form 10-D. As a result, and as is typically the case today with distribution reports filed under Form 8-K, we estimate that on average no additional information is likely to be required in the Form 10-D with respect to distribution or pool performance.

Accordingly, we are not including preparation of the distribution report in our burden hour estimates for preparing Form 10-D. We do estimate that it would take approximately 6 hours to assemble the distribution report with the Form 10-D for filing. We also propose a few incremental disclosures regarding distribution and pool performance information, such as those relating to the changes to the asset pool, that may not be required in the average distribution report today. We estimate that these disclosures would result in an average of 10 hours per filing. Finally, we estimate the remaining disclosures for the Form 10-D, such as the disclosures required by Part II of Form 10-Q, would result in an average of 14 hours per filing.

As a result, we estimate that, on average, completing and filing a Form 10-D if the new proposals were adopted would impose a burden of 30 hours per filing. As with our other estimates for Exchange Act reports by non-ABS issuers, we estimate that 75% of the burden is borne by the ABS issuer and that 25% of the burden is borne by outside professionals retained by the issuer at an average cost of $300 per hour. We thus estimate that proposed Form 10-D would result in a total annual burden of 213,750 hours (9,500 filings x 30 hours x .75) and an added annual cost of $21,375,000 (9,500 filings x 30 hours x .25 x $300 per hour). It should be noted, however, that this reflection of the burden predominantly consists of codifying the already existing requirements applicable under the modified reporting system where such filings appear under cover of Form 8-K and are offset by our corresponding reduction in our estimated number of Form 8-Ks that would be filed.

6. Regulation S-K

Regulation S-K includes the requirements that an issuer must provide in filings under both the Securities Act and the Exchange Act. Our proposed disclosure changes would include changes to items under Regulation S-K and the addition of a new subpart to Regulation S-KRegulation ABthat would provide disclosure items particularly tailored to asset-backed securities.³⁰⁴ However, as noted above, the filing requirements themselves are included in Forms S-1, S-3, 10-K and 8-K and proposed Form 10-D. We have reflected the burden for the new requirements in the burden estimates for those forms. The items in Regulation S-K, including proposed Regulation AB, do not impose any separate burden. We assign one burden hour to Regulation S-K for administrative convenience to reflect the fact that the regulation does not impose any direct burden on companies.

C. Request for Comment

We request comment in order to (a) evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility; (b) evaluate the accuracy of our estimates of the burden of the proposed collections of information; (c) determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; (d) evaluate whether there are ways to minimize the burden of the collections of information on those who respond, including through the use of automated collection techniques or other forms of information technology; and (e) evaluate whether the proposals will have any effects on any other collections of information not previously identified in this section.

Any member of the public may direct to us any comments concerning the accuracy of these burden estimates and any suggestions for reducing the burdens. Persons who desire to submit comments on the collection of information requirements should direct their comments to the OMB, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and send a copy of the comments to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609, with reference to File No. S7-21-04. Requests for materials submitted to the OMB by us with regard to these collections of information should be in writing, refer to File No. S7-21-04, and be submitted to the Securities and Exchange Commission, Records Management, Office of Filings and Information Services, 450 Fifth Street, NW, Washington, DC 20549. Because the OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication, your comments are best assured of having their full effect if the OMB receives them within 30 days of publication.

V. Cost-Benefit Analysis

The proposed rules and Regulation AB codify staff and industry practice for public offerings of asset-backed securities with incremental changes. They would provide definitive rules for these offerings registered under the Securities Act as well as ongoing reporting by asset-backed issuers under the Exchange Act. In this section, we examine the benefits and costs of our proposed rules. We request that commenters provide views along with supporting data as to the benefits and costs associated with the proposals.

The Commissions corporate offering and disclosure rules were not designed to accommodate some of the special characteristics of ABS offerings. The current offering and disclosure process for ABS has developed through no-action letters, staff comment, market practice and informal staff interpretations. This current informal regulatory regime for asset-backed offerings is sub-optimal for a well-developed market that represents a large portion of the U.S. capital markets. The accumulated informal guidance has diminished the transparency of applicable requirements, potentially decreasing efficiency and leading to uncertainty and common problems. Many issuers, investors and other market participants have requested a defined set of regulatory requirements.³⁰⁵ Many compliance issues may be mitigated and potential issues avoided through clearer and more transparent regulatory requirements. Establishing clear and transparent requirements also could reduce costs to entry into the market. As a result, the proposals to codify staff position and industry practice with incremental changes would clarify and simplify the process of registering an ABS offering. This should lower the overall costs of complying with the federal securities laws.

In order to improve an investors understanding of an ABS offering, we propose incremental enhancements to disclosure regarding the participants involved in the ABS transaction and of historical data regarding the performance of the assets backing the current and prior comparable asset-backed offerings, known as static pool data. We propose to improve the current framework for reporting on compliance with servicing criteria that would operate within a disclosure-based framework and cover the entire spectrum of the servicing function in an ABS transaction. An independent public accountant would attest under recognized professional standards for attestation to the responsible partys assertion of compliance with the servicing criteria. We also propose incremental changes to current staff and industry practice to allow certain lease-backed and other ABS immediate access to shelf registration through Form S-3 eligibility, along with incremental disclosure to address the different nature of these offerings. In addition, we are proposing to allow additional asset types to be securitized through master trusts or through transactions using a revolving period, again with incremental disclosure to add transparency to the use of these structures and potential changes to the asset pool over time. We are relaxing restrictions on incorporation by reference. We also are proposing to give foreign issuers access to shelf offerings and Form S-3. Finally, we are providing interpretive guidance in a number of areas in addition to proposed rule changes, such as guidance regarding the preparation of base prospectuses and prospectus supplements and EDGAR reporting, to establish more clear and uniform practices across the ABS market.

A. Parties Eligible to Use the New Regulatory Structure

The definition of asset-backed security would no longer be limited to those issuers eligible to register securities on Form S-3 but expanded to any type of security that meets the proposed definition of an asset-backed security. This would bring all ABS transactions and issuers into an appropriate disclosure system regardless of what Securities Act form they were eligible to use.

Our proposals would codify several clarifying interpretations of existing staff positions to recognize and build upon the operational and structural distinctions between ABS and non-ABS transactions. The current staff position regarding non-performing assets and delinquent assets would be incorporated into the definition of an asset-backed security with clarifying guidance as to how these concepts are to be determined. However, in codifying staff positions, we also are proposing to expand some of them to allow additional asset types and transaction features to be included. For example, the definition of asset-backed security would be expanded so that additional lease-backed ABS would be included. The proposals would allow structures such as master trusts and revolving periods, currently allowed by the staff for only certain asset classes, to be used by all asset-backed issuers. Therefore, if the market found these structures attractive for other asset classes, asset-backed issuers could effectively utilize the structures in their ABS offerings. We propose to increase disclosure to provide greater transparency of changes to pool composition.

The proposed definition and interpretations are intended to establish parameters for the types of securities that are appropriate for our proposed alternative regulatory regime for ABS. The proposals would not mean or imply that public offerings of securities outside of these parameters may not be registered, but only that the disclosure and other requirements in the ABS regime are not designed for those securities. Such securities would need to rely on non-ABS form eligibility for registration, and additional disclosures would be required. This may mean that on the margins the proposed requirements may influence market practice. However, we have taken an expansive approach to the concept of what is an "asset-backed security" to minimize such instances and to allow flexibility in market developments.

B. Securities Act Registration

We propose to allow domestic and foreign issuers to use either Form S-1 or Form S-3 to register an offering of asset-backed securities. Transactions backed by additional lease pools also would be allowed to use Form S-3 under the proposal. This will provide the benefit of delayed offerings to foreign issuers and some issuers of ABS backed by lease pools. We believe this will make the offering process less costly for these issuers. We propose to require additional disclosure for these two types of offerings to provide investors with a clear understanding of the unique issues these offerings raise. To remove regulatory uncertainty for issuers, we propose to codify a number of current staff positions, including clarifying and streamlining the conditions when a distribution of underlying pool assets must be concurrently registered with the distribution of ABS. We also propose to codify current staff position that the depositor should sign the registration statement and who is considered the issuer for Securities Act purposes. In very limited situations, the staff required the issuing entity to sign the registration statement. As this did not appear to provide any significant benefit to investors, and in some cases, may have added costs to issuers, we have not codified this position. We believe the proposed rules for Securities Act registration would increase transparency of the current informal regulatory regime for issuers of asset-backed securities, provide increased flexibility for additional ABS transactions and help the asset-backed securities market function more efficiently.

The proposals would revise the instructions for Form S-1 and Form S-3 for registered asset-backed offerings to clarify those items under Regulation S-K that an issuer would be required to disclose, if applicable, and list the items that an issuer would not be required to disclose due to the different nature of the ABS transactions. The instructions for Form S-1 and Form S-3 would include additional disclosure items under Regulation AB, a proposed set of principles-based disclosure requirements for ABS discussed in the next section. We believe the proposed instructions integrate disclosure items for the respective forms, which will reduce compliance costs and provide certainty about the disclosure requirements for issuers while promoting relevant disclosure for investors. We request comment on the type and amount of any potential costs the proposed rules for an asset-backed offering would place on issuers or investors.

The proposals for Form S-3 eligibility would remain essentially the same as under existing practice. We do propose codifying that reporting obligations regarding other ABS transactions established by the depositor have been complied with for the prior 12 months for continued Form S-3 eligibility for new transactions, which is consistent with existing staff policy. We propose to expand this requirement to also cover the reporting history of transactions by the sponsor. This is in order to avoid a sponsor merely setting up a new special purpose entity to obtain Form S-3 eligibility when prior transactions have not complied with Exchange Act reporting. While we believe the instances when this requirement would not be met should be rare, it could have the effect of foreclosing certain issuers from Form S-3 eligibility if they violate reporting requirements for other transactions. However, we do not believe it would be appropriate to continue to allow the benefits of shelf registration to new transactions established by the same market participants that have not complied with ongoing reporting obligations involving previous transactions.

We propose to codify an existing no-action position that broker-dealers involved in Form S-3 ABS transactions do not need to deliver a copy of the preliminary prospectus 48 hours prior to sending a confirmation of sale. The proposal would de-link this exclusion from the current requirement that the ABS transaction not include a prefunding account larger than 25% of the pool. We propose to put the 25% prefunding limitation in Form S-3 eligibility, but allow prefunding accounts up to 50% to be used in transactions registered on Form S-1, which is consistent with the treatment of revolving periods. We believe codifying this position will benefit issuers in the distribution process, but we request comment from investors as to whether this will increase their burden by significantly increasing the number of transactions that are sold within compressed timeframes. We also request comment from issuers if moving transactions with prefunding levels between 25% to 50% of the pool to Form S-1 causes any material burden. C. Disclosure

The proposed disclosure items under Regulation AB would provide a disclosure structure tailored to the different nature of ABS. We anticipate the proposals would assist issuers and investors by clarifying the disclosure requirements. In addition, the proposal:

• Confirms that financial statements of the issuing entity are not required for ABS transactions;
   

• Clarifies when third party financial information is required; and
   

• Codifies when third party financial information may be incorporated by reference or referred to in registration statements.
   

The proposed disclosure required under Regulation AB is largely based on current market practices and therefore the increase in costs to issuers should be measured. Recognizing that it would be impractical to provide an exhaustive list of disclosure items for each asset class, the proposed disclosure requirements are principles-based and thus provide flexibility for issuers where doing so would yield more focused and descriptive disclosure for investors and reduce the burden for issuers. We believe the proposal attempts to mitigate the possibility that immaterial information may overwhelm the disclosure by keying many disclosure items to a materiality-based standard. Thus, the proposed disclosure gives registrants, underwriters and their advisors the opportunity to balance the need for registrants to have flexibility when drafting disclosure with investors need for more transparency. Whether they will take advantage of this opportunity is largely their decision.

The proposals attempt to increase transparency regarding roles and qualification of parties involved in the offering and on-going activities of the ABS transaction. Various market participants have indicated there has been confusion over the roles of parties in particular transactions or types of transactions. Similarly, market participants have indicated the role of the servicer and its servicing practices can materially impact an ABS transaction. In addition, investors have repeatedly requested that we require static pool data. According to these investors, this proposed disclosure would assist investors in analyzing the origination trends of the sponsor's overall portfolio, which would provide material information on both the quality and experience of pool selection and asset performance. As with many other disclosure items, we believe it would be impractical to impose standardized requirements that would be applicable and efficient for all transactions regarding disclosure of this data. Accordingly, the static pool data required would be keyed to the data material to the transaction. We understand almost all issuers already have static pool information available, although it may have to be subjected to additional procedures and diligence before it is included in disclosure documents. We nonetheless believe preliminarily that it should not present a significant burden to issuers, while it will improve transparency for investors in ways that investors have indicated is important. As noted below, we request comment on the type and magnitude of the burden these disclosure requirements would represent to issuers.

The proposed expanded disclosure would offer a greater understanding of the background, previous experience, and specific role of the sponsor, depositor, servicer and trustee. The proposed disclosure on the asset underwriting criteria of the sponsor would provide a clear understanding of the type of assets investors should expect in the asset pool. Some discussion of underwriting criteria is currently included, although it is typically minimal. We do not believe the costs to prepare the proposed disclosure should substantially increase. The proposed disclosure on servicing practices of all servicers materially involved in the maintenance of the asset pool and the existence of contractual back-up servicing is indicative of the importance of the servicer to the ongoing performance of the ABS transaction. We believe the proposals would stimulate higher quality disclosures of key aspects of the ABS transaction and its participants, which would yield more relevant information available to investors and allow them to make better-informed investment choices and potentially reduce the likelihood that pool assets or an ABS transaction will perform dramatically different than anticipated by investors.

This proposed disclosure under Regulation AB may increase the costs to issuers of asset-backed securities. The proposed disclosure is intended to enhance the utility of the disclosure in registration statements and ongoing Exchange Act reports. Issuers may need to reevaluate current disclosure from prior registration statements to determine the scope of additional information. We also encourage issuers to evaluate whether they should eliminate immaterial boilerplate disclosure that is not required under Regulation AB and that does not aid understanding, but that they currently provide. Due to the informal nature of the current requirements, issuers may be unnecessarily including information that is not relevant or helpful to investors. Issuers may need to employ additional resources, including in-house personnel and outside legal counsel, to assist in this evaluation. We anticipate that most of these costs may be short-term or one-time costs in preparing the first registration statement under the proposed codified disclosure regime.

We also estimate that issuers may need extra time to prepare the proposed information or obtain such information from the respective parties to the ABS transaction. However, we believe that parties already provide much of this information to rating agencies during the process of obtaining a rating on the offering, and thus such information should be readily available. Therefore, we do not anticipate that issuers would incur significant costs in complying with the proposed disclosure regime.

For purposes of the Paperwork Reduction Act, we estimate that the incremental burden in preparing the additional Securities Act disclosures would be on average 250 hours per registration statement. Based on our estimated costs of in-house personnel time, we estimate the incremental PRA hour-burden would translate into an approximate cost of $12,967,275.³⁰⁶ We request comment on the type, amount and duration of any additional costs to comply with the proposed disclosure regime. These additional compliance costs should result in consistent and more tailored information that may assist the capital markets in properly valuing asset-backed securities. These benefits are difficult to quantify.

D. Communications During the Offering Process

The proposals to codify the existing ability to use written communications outside of the registration statement prospectus recognize the current beneficial information these communications provide to potential investors in an ABS offering. The proposals would simplify the definitions of the written communications that an issuer may use and incrementally expand it by allowing the use of static pool data. The proposals also clarify that the scope of the written communications permits data at the individual pool asset level. Loan level data may in some cases assist investors in better understanding the nature of the individual loans included in the pool, which in turn may increase the quality of information available to investors.

The proposals streamline the filing requirements for these communications by providing that all types of ABS informational and computational material be filed in the same timeframe, thus reducing the regulatory uncertainty for issuers as to when to file written communications. The proposals would eliminate the hardship exemption for filing these materials in paper rather than on EDGAR. Given the developments in our EDGAR system, we believe these materials can be filed easily on EDGAR. The proposals should increase the uniformity and timeliness of information received by investors as well as disseminated to the marketplace. Since all investors almost uniformly access Commission filings electronically, this proposal should significantly benefit them. We request comment on the cost to issuers of eliminating the EDGAR hardship exemption.

We do not propose to change the scope or liability requirements of the material that may be used, so our proposals should not result in incremental costs from existing requirements. Staff in the Division of Corporation Finance is developing recommendations to the Commission on additional potential reforms to the Securities Act registration process for all offerings. We plan to address the issue of whether additional accommodations to the communications restrictions would be appropriate, including for ABS offerings, in connection with any recommendations on broader reforms.

We also propose to codify an existing staff safe harbor regarding the use of research reports published or distributed by a broker or dealer involving ABS. Both the existing safe harbor and our proposal recognize the different nature of ABS by providing tailored conditions for ABS research reports. Given that the proposed safe harbor is consistent with the existing staff safe harbor, it too should not result in incremental costs.

E. Ongoing Reporting under the Exchange Act

We propose to integrate and streamline the modified reporting structure currently permitted by scores of no-action letters for issuers of asset-backed securities to meet their reporting obligations under the Exchange Act. The proposal clarifies who has the reporting obligation under the Exchange Act and who must file and sign the annual, periodic and current reports. The proposal differs from current practice of allowing trustees to sign since we believe either the depositor or the servicer is the party most able to monitor the ongoing Exchange Act reporting requirements of the ABS transaction. The proposal explains when the reporting obligation begins and may be terminated by the issuer. This should provide certainty to issuers as to when their reporting obligation is suspended.

Our proposals would outline the required disclosure in the Exchange Act reports to ensure uniform reporting by issuers while reducing the information asymmetry between issuers and investors. We propose to codify the current requirements that periodic information be disclosed based on the periodicity of distributions on the securities. We believe most of the information we propose to require is typically disclosed in the current distribution reports. We request comment on the burden of any increased disclosure. Rather than filing these reports on Form 8-K, we propose that issuers use newly proposed Form 10-D for reporting periodic distributions to assist investors and the marketplace in distinguishing such distribution reports from the reporting of significant events relevant to the ABS transaction.

We do not believe the use of Form 10-D rather than Form 8-K for filing these reports would result in additional costs beyond minimal one-time transition costs. Regarding the content of the Form 10-D, we do propose a few incremental disclosures, such as those relating to the changes to the asset pool. For purposes of the Paperwork Reduction Act, we estimate that the burden in preparing these incremental disclosures for the Form 10-D would be on average 10 hours per Form 10-D. Based on our estimated costs of in-house staff time, we estimate the incremental PRA hour-burden would translate into an approximate cost of $17,943,750.³⁰⁷

We have reviewed our recently revised Form 8-K requirements and propose the item requirements we believe should be applicable to ABS issuers. In addition, we propose several ABS-specific reportable events for Form 8-K disclosure. The separate filing of reportable events on Form 8-K will accelerate the delivery of information to the capital markets, which should enable investors to better monitor reportable events affecting the asset-backed securities or the relevant parties involved in the ABS transaction. Issuers of asset-backed securities may incur additional costs to report these events under a shorter timeframe; however, these additional costs should be consistent with the costs incurred by corporate issuers of other securities. For purposes of the PRA, we estimate that the proposals would cause, on average, an increase of two reports on Form 8-K per ABS issuer per year. Based on our estimated costs of in-house staff time, we estimate the PRA hour-burden would translate into an approximate cost of $2,475,000.³⁰⁸

Under the modified reporting no-action letters, ABS issuers include with their annual report on Form 10-K a report by an independent public accountant attesting to a responsible partys assertion of compliance with servicing criteria. We propose to codify this approach. Under this approach, audited financial statements of the issuing entity and reporting regarding internal control over financial reporting are not required. We also would propose to codify this practice because we believe the costs to provide audited financial statements and reporting regarding internal control over financial reporting would greatly outweigh any minimal benefits obtained from these requirements. We believe our current approach is more cost-effective and beneficial in ABS transactions.

The current modified reporting system does not provide optimal transparency as to what is expected of issuers, servicers, accountants and other parties. We propose to enhance the current framework for reporting on compliance with a single set of transparent and comprehensive servicing criteria regarding an ABS transaction. The only framework generally used today is limited to a specific asset class, covers only limited servicing functions and represents minimum standards. Therefore, we believe the market would benefit by our proposed servicing criteria. We believe that the proposed disclosure-based criteria would improve the quality of the assessment of compliance and elicit disclosure that is comparable among different issuers. We do request comment on whether alternate suitable criteria could be developed for purposes of the proposals.

We propose that the responsible party and the registered public accounting firm would use the proposed servicing criteria in assessing and reporting on servicing compliance. We have attempted to provide flexibility by proposing servicing criteria that are principles-based and thus may be tailored to the servicing operations for ABS transactions of any asset class. In addition, we propose the assessment and reporting on the servicing criteria to operate within a disclosure-based framework. For example, we would allow the responsible party to exclude the particular servicing criteria that are inapplicable to the servicing of a specific asset class provided that the inapplicability of the criteria was disclosed. In addition, the proposal would require the responsible party to disclose if a material instance of noncompliance with the proposed criteria exists to alert investors of potential problems with the servicing function. The proposal would not result in regulatory restrictions on market access such as Form S-3 eligibility. This approach attempts to balance the need for responsible parties to have flexibility when drafting disclosure on the assessment of compliance with the proposed servicing criteria with investors needs for more transparency.

The proposed criteria cover the full spectrum of servicing asset-backed securities thereby facilitating an evaluation of the servicing activities by the responsible party regardless of whether those servicing activities are conducted by the responsible party or other parties, such as sub-servicers. We believe one of the critical components is calculation of the payments on the securities, also referred to as the "waterfall." Our proposal attempts to cover this part of the servicing function, which is not necessarily part of the scope of the current framework. This improved assessment would enable investors, other responsible parties to the transaction and ultimately the marketplace to analyze the operational quality of the entire servicing function, which should improve investor confidence in the overall performance of the asset-backed securities.

We estimate that the proposed servicing criteria may impose new disclosure requirements on compliance assessments that do not presently utilize the current framework. Since the proposed servicing criteria are designed to evaluate servicing compliance, including compliance related to the waterfall, we estimate that the scope of compliance assessments may need to be enhanced to address these new disclosure requirements. We also understand that additional time and cost may be required to help assure that appropriate parties are accountable for reporting the applicable servicing criteria to the responsible party, which may include an internal assessment of servicing compliance or obtaining reports on servicing compliance from other parties involved in servicing. One of the benefits of a single responsible party approach would be assurance that all aspects of the servicing function have been assessed. To the extent that the responsible party and other parties involved in servicing do not maintain compliance with the proposed criteria and do not wish to publicly disclose this fact, the proposed disclosure-based criteria could lead to these parties instituting appropriate procedures to comply with the criteria and thus incur implementation costs. We request comment on the type, amount and duration of these costs.

Consistent with the modified reporting system, we believe the requirement that a registered public accounting firm attest to the responsible partys assessment of compliance with a single set of servicing criteria is an important component of the proposal. The engagement of an independent accountant improves investor confidence by establishing an independent check on the responsible partys assessment of servicing compliance. In addition, the attestation by the independent accountant may detect material instances of noncompliance with the servicing criteria that may provide early warning signals of potential losses incurred by investors. The proposed attestation of the entire servicing function would increase the costs of preparing the annual report since the accounting costs would likely increase due to the increase in the breadth of servicing function covered. These costs should be mitigated since many of the proposed servicing criteria are based on the current framework and our criteria propose only incremental changes to the current framework.

In addition to the proposed assessment of compliance with servicing criteria, we propose to continue requiring issuers to file a servicer compliance statement regarding compliance with material aspects of the servicing agreement. This codifies current practice and should not by itself result in any additional costs. We also propose to specify the form and content of the Sarbanes-Oxley Section 302 certification for ABS issuers consistent with existing staff practice. We propose minimal changes to the form to reflect our other Exchange Act proposals and to reflect the approach that the language of the certification must not be revised in providing the certification apart from the alternatives specified. Instead, any issues should be addressed through disclosure in the reports. We do not believe these revisions will result in incremental costs and should result in a more uniform and consistent certification process.

For purposes of the Paperwork Reduction Act, we estimate that the incremental burden in preparing the Form 10-K, including the proposed assessment of compliance with servicing criteria, would be on average 30 hours per response. Based on our estimated costs, we estimate the PRA hour-burden would translate into an approximate cost of $9,675,000.³⁰⁹ We request comment on the type, amount and duration of these costs. We believe this increased burden would result in benefits to the ABS market in terms of an enhanced assessment and disclosure regarding the servicing functions and increased assurance and investor confidence in these disclosures. These benefits are difficult to quantify.

We also reiterate existing staff view that the final prospectus and Exchange Act reports are to be separately filed under the CIK code and file number of the respective issuing entity on EDGAR. This facilitates access to information relevant to the particular securities involved. We anticipate that some issuers not following this existing practice may incur additional costs by preparing separate Exchange Act reports for each issuing entity because some issuers provide combined reports. However, we believe these costs will be limited since issuers are already reporting this information for a particular issuing entity, albeit in a combined report. Some of the issuers that combine reports do so for scores of issuers such that investors may have to sift through hundreds of pages that relate to securities they do not own. Further, combined reporting creates inefficiencies in the storage, retrieval and analysis of EDGAR information.

VI. Consideration of Impact on the Economy, Burden on Competition and Promotion of Efficiency, Competition and Capital Formation

For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"),³¹⁰ a rule is considered "major" where, if adopted, it results or is likely to result in:

• An annual effect on the 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 the potential impact of the proposals on the economy on an annual basis. Commenters are requested to provide empirical data and other factual support for their views if possible.

Section 23(a)(2) of the Exchange Act³¹¹ requires us, when adopting rules under the Exchange Act, to consider the impact that any new rule would have on competition. In addition, Section 23(a)(2) prohibits us from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. Furthermore, Section 2(b) of the Securities Act³¹² and Section 3(f) of the Exchange Act³¹³ require us, when engaging in rulemaking where we are required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.

The proposals are intended to increase transparency by amending informal industry and staff practices into a formal regulatory regime for offerings of asset-backed securities under the Securities Act and ongoing reporting under the Exchange Act. We anticipate that these proposals would enhance capital formation by simplifying the process of registering an offering of asset-backed securities allowing parties not fully immersed in the ABS market to ascertain and understand the offering and disclosure requirements, thus promoting efficiency and competitiveness of the U.S. capital markets for asset-backed offerings.

Our specific proposals relate only to transactions that meet our proposed definition for an asset-backed security under the Securities Act. Although the definition for an asset-backed security captures most asset-backed structures, there may be transactions that are fundamentally different from the proposed definition. However, transactions that would not fit the parameters of the definition would still be able to access the capital markets. Instead, these transactions would be required to rely on non-ABS form eligibility for registration, and additional disclosures would be required.

In addition, the proposed principles-based disclosure requirements would allow great flexibility in implementation for all asset classes while enhancing the quality of disclosure for ABS transactions. Similarly, the proposed servicing criteria are intended to provide a comprehensive assessment to evaluate the overall servicing function for the ABS transaction. We anticipate these proposals should improve investors ability to make informed investment decisions about asset-backed offerings as well as help increase investor confidence in the servicing of ABS transactions. We anticipate this would therefore lead to increased efficiency and competitiveness of the U.S. capital markets. Increased market efficiency and investor confidence also may encourage more efficient capital formation.

The proposals could have certain indirect negative effects. For example, the proposed incremental disclosures would increase transparency regarding a sponsors or servicers business practices. However, all such parties would be required to disclose such information equally, and the increased disclosures are designed to facilitate information to investors to improve their ability to make informed investment decisions. In addition, if transactions in the private market for ABS or foreign markets do not result in similar disclosures, issuers could, all things being equal, migrate to those markets to avoid such disclosures. However, there may be limitations on the ability to migrate to these markets given the large size of the U.S. ABS market and potential regulatory or investment restrictions on the ability of investors to purchase non-public ABS. In addition, competitors and markets not subject to the proposed requirements may suffer from decreased investor confidence if the asset-backed offerings lack the transparency of asset-backed offerings that do comply with the disclosure regime.

The proposals are designed to improve the current framework for reporting on compliance with servicing criteria that would operate within a disclosure-based framework and cover the entire spectrum of the servicing function. We believe the proposed servicing criteria will provide value to the ABS industry in establishing market-wide disclosure benchmarks and promote market efficiency by providing meaningful disclosure regarding the overall servicing function by a responsible party that is attested to by an independent public accountant. The disclosure-based framework of the servicing criteria would provide information about the entire servicing function to be publicly available for investors, as well as the marketplace, to monitor the performance of the ABS transaction. This should promote investor confidence and market efficiency by decreasing information asymmetries and promoting more efficient pricing and valuation of the securities. As a result, capital may be allocated more efficiently. In addition, the proposed servicing criteria would promote the comparability of reports of different issuers, thus promoting investor analysis as well as competition among such issuers.

We request comment on whether the proposals, if adopted, would promote efficiency, competition and capital formation or have an impact or burden competition. Commenters are requested to provide empirical data and other factual support for their views if possible.

VII. Regulatory Flexibility Analysis 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 157³¹⁴ and Exchange Act Rule 0-10(a)³¹⁵ 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. The staff analyzed sponsors that conducted registered public offerings of asset-backed securities transactions during 2003. No sponsor had total assets of $5 million or less. Accordingly, the Commission does not believe that the proposals, if adopted, would have a significant economic impact on a substantial number of small entities.

We solicit written comments regarding this certification. We request comment on whether the proposals could have an effect that we have not considered. We request that commenters describe the nature of any impact on small entities and provide empirical data to support the extent of the impact.

²⁹⁷44 U.S.C. 3501 et seq.

²⁹⁸44 U.S.C. 3507(d) and 5 CFR 1320.11.

²⁹⁹We are proposing to move all Securities Act registrations of ABS offerings to Form S-1 or Form S-3. Correspondingly, we are reducing our estimate of responses on Form S-11.

³⁰⁰This estimate is consistent with the estimate of the allocation of the burden for non-ABS issuers on Form S-1 where all of the required information must be included in the form. The staff estimated the average hourly rate for outside professionals by contacting a number of issuers and other persons regularly involved in completing the forms.

³⁰¹The presentation of the disclosure may be somewhat different if the offering on Form S-3 is to be conducted on a delayed, or "shelf," basis. In that case, the Form S-3 will typically consist of a base prospectus and prospectus supplement in lieu of a single document. However, the content of the disclosures should be substantially similar.

³⁰²This estimate is based on the number of final prospectuses filed pursuant to Securities Act Rule 424(b) during this period with respect to asset-backed securities. For most ABS offerings, the filing of the prospectus under Rule 424(b) for a takedown of securities results in a new issuing entity and a separate Exchange Act reporting obligation. However, some issuers had been filing "combined" reports of filing one Form 10-K covering multiple issuing entities. We are using this estimate to reflect the approximate number of Form 10-K filings that would have been made by ABS issuers in the absence of combined reporting.

³⁰³This estimate also reflects the approximate number of distribution report filings that would have been made by ABS issuers in the absence of combined reporting.

³⁰⁴We also are proposing technical changes to Regulation S-B, which includes the requirements that a small business issuer must provide in the Securities Act and the Exchange Act similar to Regulation S-K. These technical changes are designed to clarify that Regulation S-B is inapplicable to asset-backed securities. Like, Regulation S-K, Regulation S-B does not impose any separate burden. We previously have assigned one burden hour to Regulation S-B for administrative convenience to reflect the fact that the regulation does not impose any direct burden on companies.

³⁰⁵See note 55 above.

³⁰⁶We estimate that the additional disclosures for Form S-1 and Form S-3 would result in 12,063 internal burden hours and $10,856,250 in external costs. Assuming a cost of $175/hour for in-house professional staff, the total cost for the internal burden hours would be $2,111,025. Hence the aggregate cost estimate is $12,967,275.

³⁰⁷We estimate that preparing the incremental disclosures would result in 71,250 internal burden hours and $7,125,000 in external costs. Assuming a cost of $175/hour for in-house professional staff, the total cost for the internal burden hours would be $12,468,750. Hence the aggregate cost estimate is $19,593,750. As Form 10-Q Part II information already is required under the modified reporting system, we do not estimate the codification of that reporting obligation would result in incremental costs.

³⁰⁸We estimate that the additional Form 8-K filings would result in 9,000 internal burden hours and $900,000 in external costs. Assuming a cost of $175/hour for in-house professional staff, the total cost for the internal burden hours would be $1,575,000. Hence the aggregate cost estimate is $2,475,000.

³⁰⁹We estimate that the incremental burden would result in 9,000 internal burden hours and $8,100,000 in external costs. Assuming a cost of $175/hour for in-house professional staff, the total cost for the internal burden hours would be $1,575,000. Hence the aggregate cost estimate is $9,675,000.

³¹⁰Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).

³¹¹15 U.S.C. 78w(a)(2).

³¹²15 U.S.C. 77b(b).

³¹³15 U.S.C. 78c(f).

³¹⁴17 CFR 230.157.

³¹⁵17 CFR 240.0-10(a).