Link to the proposed SEC rule: http://www.sec.gov/rules/proposed.shtml http://www.sec.gov/rules/proposed.shtml Look for 33-9117.pdf Interesting questions bas

Link to the proposed SEC rule: http://www.sec.gov/rules/proposed.shtml http://www.sec.gov/rules/proposed.shtml Look for 33-9117.pdf Interesting questions based on my reading from the pdf (see excerpt below, italics by me): If it's not currently practical to evaluate an investment before making an investment decision, why would you make the decision to invest? <cough,cough, index fund, cough> Next, who wants to do a constraint-programming back-end web app that takes a prospectus and generates this functional code? How much would institutions pay us for this? From the pdf: "The ABS issuer or the underwriter generally will have a computer model of the waterfall. However, the issuer or underwriter currently has no obligation to share the computer model with actual or potential ABS investors. Because prospective investors in ABS typically do not have access to the ABS issuer’s computer models, under current conditions, an investor must create its own computer program. It does this by taking the priority of payment rules stated in the trust agreement, pooling and servicing agreement, indenture, or other operative document for the ABS and described in the prospectus, converting the English language statement of those provisions into one or more algorithms, and then expressing the algorithms as computer code in a programming language. As a practical matter, it is often not possible to complete these steps before making an investment decision. This is particularly onerous for smaller institutional investors, for whom it may not be feasible to acquire the financial and technological expertise necessary to develop a computer program of the waterfall. Thus, investment decisions with respect to ABS may be made without the benefit of the investor performing its own quantitative valuation analysis. This may encourage undue reliance on the determinations of credit rating agencies. Further, there is the possibility that some investors will program the waterfall erroneously, leading to inaccurate ABS valuations."