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Asset-backed securities requirement for asset level data continues the trend towards structured data

Lou Rohman, Vice President, XBRL Services, Merrill Corporation | October 25, 2016

In 2014, the SEC adopted Regulation AB II which aims to bring greater transparency to the asset-backed securities (ABS) market and prevent the surprises that contributed to the 2008 financial crisis. ABS filers directly impacted by the change — which requires asset information to be submitted in a structured data format on Form ABS-EE — are likely well aware. The change is also an important signal to all filers: the SEC is moving full-steam-ahead to add structured data requirements for more disclosures and submissions.

Asset Backed Securities Lou Rohman Blog Merrill Corporation

Change requires asset-level disclosure in XML format

The new rules require filers to meet specific disclosure and filing requirements unique to ABS offerings to modernize and improve reporting. The mandate includes disclosure of asset-level information on Form ABS-EE in a standardized, tagged data format — eXtensible Mark-up Language (XML), a close relative of the XBRL structured data format of which most of you are now familiar. The SEC also provided definitions for each data point and specified the scope of the information required. This will ensure uniform, comparable data reporting.

Providing investors a complete picture of ABS

The changes are a direct response to issues exposed in the 2008 financial crisis. The goal is to provide investors with complete transparency of underlying ABS assets by giving them access to standardized, structured data that allows for fast, detailed analysis. SEC Chair Mary Jo White said the changes make it “easier for investors to review and access the information they need to make informed investment decisions.”

A sign of things to come

Going forward, filers should expect more changes like this. Mark Flannery, Director and Chief Economist of the SEC’s Division of Economic and Risk Analysis, told Merrill that “Every time there is a new form, or every time a form is revised, DERA will look at whether there is a good role for tagging or structuring the data that is being requested."

At Merrill, our team of structured data experts can help filers comply with this new ABS requirement. We’re also monitoring for future changes like these — between our involvement with the XBRL US Data Quality Committee, various industry advisory groups and frequent communications with the SEC — so we can prepare to help filers with what’s next in structured data.

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