Finance Alert: Implications of the Final Risk Retention Requirements for ABCP Conduit Sponsors

Summary: The final Dodd-Frank risk retention regulations provide challenges for ABCP sponsors. A special rule tailored to ABCP conduits is included in the regulations—and would provide relief for “eligible ABCP conduits” so long as their originator-sellers retain risk in the proper amount and manner on their respective asset pools—but it may not always be feasible to comply with requirements for qualification as an eligible ABCP conduit or to meet the other requirements of that rule. Certain conduits may be required to comply with risk retention requirements in alternative ways.