SEC Rule 190

Overview and Regulatory Purpose

Asset-backed securities are instruments whose cash flows and credit performance derive from a defined pool of financial assets. In many securitisation structures, the pool assets consist of conventional financial instruments — mortgages, auto loans, credit card receivables — that are not themselves securities within the meaning of the Securities Act and therefore raise no independent registration question. However, certain securitisation structures incorporate instruments that are securities issued by another person, including collateral certificates, special units of beneficial interest, and other structured finance instruments created in layered or re-securitisation transactions.

In these structures, the question arises whether the inclusion of an underlying security in an ABS asset pool constitutes or involves a separate offering of that underlying security to the public — and if so, whether that separate offering must be independently registered.

Prior to the adoption of Rule 190 as part of the original Regulation AB framework in 2005, the Commission's rules did not address this question directly, leaving market participants to navigate the registration analysis on the basis of general Securities Act principles, no-action letter guidance, and private legal analysis.

The resulting uncertainty imposed transaction costs and legal risk on ABS market participants, particularly in the growing market for re-securitisations and structured finance transactions involving layered pools of securities. Rule 190 resolved this uncertainty by establishing a clear default rule — underlying securities must be registered unless an exemption applies — and by specifying the precise conditions under which the registration requirement is waived, thereby providing market participants with a reliable and predictable compliance framework.

The regulatory purpose of Rule 190 is to ensure that investors in asset-backed securities that incorporate underlying securities issued by third parties have access, through the Securities Act's registration and disclosure framework, to the material information necessary to assess the quality and characteristics of those underlying securities as inputs to the ABS pool.

This investor protection rationale reflects the Commission's recognition that the credit quality, structural features, and disclosure record of underlying securities are material to the investment decision in the ABS itself, and that the registration framework is the appropriate mechanism for ensuring that information is publicly available and subject to the Commission's review.

Statutory Authority and Rulemaking History

Rule 190 derives its statutory authority from Section 19(a) of the Securities Act of 1933 and was adopted as a new rule in the Commission's landmark Regulation AB rulemaking, published in Securities Act Release No. 33-8518, effective January 7, 2005. The Regulation AB rulemaking was the most comprehensive regulatory initiative ever undertaken by the Commission in the ABS space, establishing for the first time a comprehensive and integrated framework of disclosure, offering, and reporting requirements specifically tailored to the asset-backed securities market. Rule 190 was adopted alongside Rules 191, 192, 193, and 426 as part of the offering process components of that framework, addressing the specific registration question raised by ABS transactions involving underlying securities.

The 2005 adopting release explained that the registration requirement for underlying securities reflected the Commission's view that where an ABS transaction effectively involves the public offering of securities issued by a third party — even if those securities are embedded within a larger pool structure — the informational protections of the Securities Act registration framework should attach to that offering. The Commission acknowledged that the requirement created compliance complexity in certain structured finance transactions, but concluded that the investor protection benefits of mandatory registration for qualifying underlying securities outweighed the additional transaction costs.

Rule 190 was subsequently amended in the Commission's comprehensive revision of Regulation AB, published in Securities Act Release No. 33-9638, effective September 24, 2014, and further technically amended on February 6, 2015, in connection with the Regulation AB II rulemaking, which significantly expanded the disclosure and reporting requirements applicable to ABS offerings and introduced asset-level data requirements for major ABS asset classes. The 2014 amendments refined certain technical aspects of Rule 190's exempting conditions without altering the rule's fundamental registration requirement or the basic structure of its exemptive framework. The eCFR confirms that the rule was last amended on February 6, 2015, with no subsequent amendments through June 2026. No pending rulemaking proposes material changes to Rule 190's operative text.

Key Provisions and Operative Requirements

Rule 190(a) establishes the default registration requirement. In an offering of asset-backed securities where the asset pool includes securities of another issuer — defined as underlying securities — the offering of those underlying securities must itself be registered as a primary offering in accordance with Rule 190(b), unless the underlying securities are themselves exempt from registration under Section 3 of the Securities Act or the transaction satisfies the conditions of Rule 190(c). This default rule applies regardless of the form in which the underlying securities are held within the pool or the structural relationship between the ABS issuer and the issuer of the underlying securities.

Rule 190(b) specifies the mechanics of the required registration where the default obligation applies. The underlying securities must be registered on the appropriate Securities Act registration form as a primary offering, and the registration statement must be filed concurrently with or prior to the filing of the registration statement for the ABS themselves. The registration of the underlying securities as a primary offering is a substantive requirement — it is not satisfied by the mere disclosure of the underlying securities' existence or characteristics within the ABS registration statement — and it triggers the full range of Securities Act obligations applicable to primary offerings, including prospectus delivery, liability under Sections 11 and 12, and ongoing Exchange Act reporting where the underlying securities are of a class that meets the Exchange Act's reporting thresholds.

Rule 190(c) provides the exempting conditions that, if satisfied, relieve the ABS issuer and the issuer of the underlying securities from the concurrent registration requirement. Three conditions must all be met. First, neither the issuer of the underlying securities nor any of its affiliates may have a direct or indirect agreement, arrangement, relationship, or understanding — written or otherwise — relating to the underlying securities and the ABS transaction. Second, neither the issuer of the underlying securities nor any of its affiliates may be an affiliate of the sponsor, depositor, issuing entity, or underwriter of the ABS transaction. Third, if the underlying securities are restricted securities within the meaning of Rule 144(a)(3), Rule 144 must be available for their resale, subject to the additional condition that at least two years must have elapsed since the later of the date the securities were acquired from the issuer or from an affiliate of the issuer.

These three conditions collectively reflect the Commission's judgment that the registration requirement is most important — and the investor protection rationale most compelling — where the issuer of the underlying securities has a direct relationship with the ABS transaction or its key participants. Where the underlying securities are genuinely arm's-length instruments acquired in the secondary market by unaffiliated parties with no connection to the ABS structure, the Commission determined that the independent registration obligation serves a lesser investor protection function, since the underlying securities' characteristics can be assessed from their existing disclosure record and market pricing history.

Rule 190(d) addresses a specific structural variant involving collateral certificates and special units of beneficial interest. Where the pool assets for an ABS are collateral certificates or special units of beneficial interest, those instruments must be registered concurrently with the ABS themselves, notwithstanding the fact that they are not "underlying securities" for the purposes of Rule 190(c)'s exempting conditions framework. The concurrent registration requirement for collateral certificates and special units of beneficial interest reflects the Commission's view that these instruments — which are typically created specifically in connection with the ABS transaction and have no existence or market independent of the transaction structure — occupy a different position from arm's-length underlying securities, and that their inclusion in the ABS pool warrants the full transparency of concurrent registration.

Scope of Application

Rule 190 applies to all registered offerings of asset-backed securities where the asset pool includes securities of another issuer, without limitation based on the type of underlying securities, the asset class of the ABS, or the size of the transaction. The rule applies to re-securitisations — ABS transactions backed by pools of existing ABS instruments — which represent the most common context in which the Rule 190 analysis is triggered, as well as to any other ABS structure in which the pool contains third-party securities rather than conventional financial obligations.

The rule does not apply to ABS transactions conducted in the private placement market under Section 4(a)(2) of the Securities Act or pursuant to Regulation D, since those transactions do not involve a registration statement filed with the Commission and therefore do not engage the registration requirements that Rule 190 is designed to govern. Where an ABS issuer initially sells securities in a private placement and subsequently conducts a registered exchange offer to provide liquidity to initial investors, Rule 190's requirements attach to the exchange offer registration, and the concurrent registration analysis for any underlying securities must be conducted as of the exchange offer filing.

The exemption for underlying securities that are themselves exempt from registration under Section 3 of the Securities Act is of practical significance in certain ABS structures involving government-sponsored enterprise securities and other instruments that benefit from independent exemptions under the Securities Act. Where the underlying securities qualify for a Section 3 exemption — as is the case for agency mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac in certain circumstances — Rule 190's registration requirement does not apply, and the ABS issuer may pool those securities without triggering concurrent registration obligations.

Relationship to Related Rules and Regulations

Rule 190 operates as part of the integrated Regulation AB framework and has direct relationships with several companion rules under that framework. Rule 191 defines the term "issuer" for the purposes of Section 2(a)(4) of the Securities Act as applied to asset-backed securities, establishing the legal entity — typically the issuing entity or special purpose vehicle — that is treated as the issuer of the ABS for registration and liability purposes. Rule 193 requires ABS issuers to conduct a review of the pool assets underlying the ABS to provide reasonable assurance that the prospectus disclosure regarding those assets is accurate in all material respects — a requirement that interacts with Rule 190 in the context of re-securitisations where the underlying securities' characteristics must be reviewed as part of the broader pool asset review process.

Rule 192, the securitisation conflicts of interest rule adopted in Securities Act Release No. 33-11238, effective February 5, 2024, prohibits securitisation participants — including underwriters, placement agents, initial purchasers, sponsors, and their affiliates — from engaging in transactions that create material conflicts of interest with investors in ABS. Rule 192 operates alongside Rule 190 in the governance of ABS offerings but addresses a distinct regulatory concern: where Rule 190 addresses the registration of pool assets, Rule 192 addresses the conduct of participants in structuring and marketing the transaction. New C&DI guidance issued by the Division of Corporation Finance on July 31, 2024 clarified the scope of the "securitisation participant" definition under Rule 192, confirming that access to publicly available EDGAR information does not by itself constitute the kind of informational access that would make an affiliate a securitisation participant for Rule 192 purposes.

Rule 144, whose resale availability is a condition of Rule 190(c)(3)'s exemption for restricted underlying securities, provides the broader framework for the resale of restricted and control securities and is directly imported into the Rule 190 analysis wherever the underlying securities in the pool are restricted securities within the meaning of Rule 144(a)(3). The two-year holding period condition under Rule 190(c)(3) references Rule 144's holding period structure but operates as an independent threshold that must be satisfied in addition to, rather than as a substitute for, Rule 144's general resale conditions.

Amendment History and Regulatory Evolution

Rule 190 was adopted as an entirely new rule in 2005 with no prior regulatory precedent in the Commission's rules framework, reflecting the novelty of the structured finance market structures that the rule was designed to address. The 2014 Regulation AB II amendments refined certain technical aspects of the rule in response to market developments and comments received during the ABS market's evolution following the 2008 financial crisis, which exposed significant structural vulnerabilities in re-securitisation transactions and other complex ABS structures involving layered pools of underlying securities.

The most significant recent developments in the regulatory environment surrounding Rule 190 involve not amendments to the rule itself but the issuance of new staff guidance addressing related issues in the ABS registration and disclosure framework. On July 31, 2024, the Division of Corporation Finance published three new C&DIs addressing Regulation AB compliance questions, confirming its interpretive positions on affiliate status under Rule 192, the eligibility of certain ABS structures for specific registration forms, and the application of asset-level disclosure requirements to resecuritisations. On May 16, 2025, the Division issued further C&DI guidance clarifying that public utility securitisations structured as series trusts are asset-backed securities subject to the Exchange Act ABS reporting framework, updating and partially superseding a 2007 no-action letter that had characterised such structures as falling outside the Regulation AB ABS definition. These guidance developments, while not amending Rule 190 directly, define the regulatory environment in which the rule operates and establish the Commission staff's current interpretive positions on the ABS framework of which Rule 190 is a component.

No pending rulemaking proposes amendments to Rule 190 as of June 2026. The Commission's broader ABS regulatory agenda has shifted toward monitoring the implementation of the Rule 192 conflicts of interest framework and assessing the impact of the 2025 public utility securitisation guidance, neither of which directly affects Rule 190's operative requirements.

Enforcement Context and SEC Action Patterns

Enforcement actions specifically targeting Rule 190 compliance failures are uncommon in the Commission's published enforcement record, reflecting the rule's technical character and the relatively narrow category of ABS transactions to which its concurrent registration requirement applies. Where Rule 190 compliance issues have arisen, they have typically been identified in the examination or registration review process rather than in formal enforcement proceedings, and have been addressed through comment letter processes and registration statement amendments rather than through civil or administrative proceedings.

The broader ABS enforcement environment in which Rule 190 operates has been significantly shaped by the Commission's post-financial crisis enforcement programme, which produced a substantial body of enforcement actions under Section 17(a) of the Securities Act and Rule 10b-5 of the Exchange Act against ABS issuers, sponsors, underwriters, and rating agencies for material misstatements and omissions in ABS offering documents. While those actions did not focus specifically on Rule 190 compliance, they established the Commission's commitment to rigorous enforcement of the ABS registration and disclosure framework and reinforced the importance of accurate and complete disclosure regarding pool assets — including underlying securities — in ABS registration statements.

The Office of Examinations has not identified Rule 190 as a standalone examination priority but has included ABS offering process compliance, encompassing the accuracy of pool asset disclosure and adherence to Regulation AB's registration requirements, as part of its periodic review of broker-dealer and underwriter practices in the ABS market.

Examination Relevance and Key Takeaways

Rule 190 is most relevant to Series 7 candidates in the context of ABS offering mechanics and the registration requirements applicable to structured finance transactions. Candidates should understand the default registration requirement for underlying securities in ABS pools and the three-condition exemption framework of Rule 190(c), which relieves the registration obligation where the issuer of the underlying securities is unaffiliated with the ABS transaction participants and the underlying securities are not restricted or satisfy the Rule 144 resale conditions. The distinction between the exemption available for arm's-length underlying securities and the concurrent registration requirement for collateral certificates and special units of beneficial interest under Rule 190(d) is also a relevant examination concept.

Candidates operating in the ABS structuring or underwriting context should understand Rule 190 in connection with Rule 192's conflicts of interest prohibition and Rule 193's pool asset review requirement as components of an integrated ABS regulatory compliance framework. The 2024 and 2025 staff guidance developments confirm that the Commission continues to refine its interpretive positions on ABS regulatory questions and that practitioners should consult current C&DI guidance when addressing novel structures or fact patterns.

The key points to retain are these. Rule 190 requires that underlying securities included in an ABS asset pool be registered as a primary offering concurrently with the ABS registration, unless the underlying securities are exempt from registration under Section 3 of the Securities Act or the three conditions of Rule 190(c) are satisfied.

The Rule 190(c) exemption requires that the issuer of the underlying securities be unaffiliated with all ABS transaction participants and, where the underlying securities are restricted, that Rule 144 be available for their resale with at least two years elapsed since acquisition.

Collateral certificates and special units of beneficial interest must always be registered concurrently under Rule 190(d), regardless of the Rule 190(c) exemption. Rule 190 was adopted in 2005 as part of the Regulation AB framework, last amended February 6, 2015, and has not been materially changed since. Staff C&DI guidance issued in July 2024 and May 2025 has addressed related ABS regulatory questions without amending Rule 190's operative text. No pending rulemaking proposes changes to the rule as of June 2026.