The Securities and Exchange Commission (SEC) proposed a requirement that most ABS issuers file a computer program that gives effect to the flow of funds, or “waterfall,” provisions of the transaction.

The computer program would be filed on EDGAR and under  the proposal, an investor would be able to  download the source code for the waterfall computer program and run the program on the investor’s own computer.

A  waterfall computer program would be required to allow use of the asset data files.

The SEC that this proposed requirement is designed to make it easier for an investor to conduct a thorough investment analysis of the ABS offering at the time of its initial investment decision.

In addition, an investor may monitor ongoing performance of purchased ABS by updating its investment analysis from time to time to reflect  updated asset performance. It would allow market participants the ability  to conduct their own evaluations of ABS and make them less dependent on the analysis of third parties such as credit rating agencies.

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