IOSCO ISSUES DISCLOSURE GUIDELINES FOR PUBLIC OFFERINGS

The Technical Committee of the International Organisation of Securities Commission has released a new set of rules that will henceforth guide the issuance of new issues and the listings of asset-backed securities.

Tagged 'Disclosure principles for public offerings and listings of asset backed securities, ABS disclosure principles, a statement from the world headquarters of IOSCO on Thursday, said the document contains principles designed to provide guidance to securities regulators who are developing or reviewing their regulatory disclosure regimes for public offerings and listings of asset-backed securities.

The objective of the ABS disclosure principles, according to the statement, is to enhance investor protection, by facilitating a better understanding of the issues that should be considered by regulators in developing or reviewing their disclosure regimes for asset-backed securities.

According to the statement, 'The ABS disclosure principles were developed following a recommendation in the Technical Committee's report on the Subprime Crisis, published in May 2008, that IOSCO should develop international principles regarding the disclosure requirements for public offerings of ABS, if it was found that IOSCO's existing disclosure standards and principles did not apply to such offerings.

' Following an in-depth analysis, it was found that, due to the unique nature of ABS and ABS issuers, the types of disclosure that would be deemed most material to ABS investors are not fully captured by the existing IOSCO disclosure standards and principles, leading to the development of these principles.''

The ABS disclosure principle provides guidance for listings and public offerings of ABS, defined as those securities that are primarily serviced by the cash flows of a discrete pool of receivables or other financial assets that by their terms convert into cash within a finite period of time, such as Residential Mortgage-backed Securities and Commercial Mortgage-backed securities among others .

The principles are based on the premise that the issuing entity will prepare a document for a public offering or listing by ABS that will contain all material information, clearly presented that is necessary for full and fair disclosure of the character of the securities being offered or listed in order to assist investors in making their investment decision.