The fact that the 272 data fields required by the SEC are in many cases not relevant to Canadian mortgage loans is not by design.  Instead, it is the result of a very difficult rule drafting process for the SEC, particularly in the financial privacy area.  The initial rule proposal was published in 2010; the final rule was not adopted until 2014 after extensive comments and redrafting of the rule.  It was all the SEC could do to focus on US securitizations.  Had the SEC tried to address also assets and issuers in other jurisdictions, the drafting process would likely still be underway.  The only practical approach was to limit the analysis and the drafting to US securitizations if the changes were ever to be adopted. 

The result, however, has the effect of building a regulatory wall around the US.  As of the posting date, only one issuer had filed a registration statement with the SEC for securitization of residential mortgage loans, which had not been declared effective, and only a single non-US issuer had filed a registration statement for any asset type.  The additional burden created for non-US issuers is substantial, particularly for residential mortgage loans.  Each jurisdiction has its own financial privacy laws and the protection offered by the CFPB to issuers filing with the SEC does not protect non-US issuers from financial privacy laws in their home jurisdictions.  And then there is the expense and disruption of collecting the data. 

In the end, the decision to issue SEC-registered covered bonds becomes a cost-benefit analysis.  Does the lower coupon on SEC-registered covered bonds compared to 144A or Reg S covered bonds justify the expense and effort of complying with the new loan-level disclosure requirements of Regulation AB? How many offerings would be necessary over what period of time to recover the cost of the changes? Is cost recovery feasible given past levels of issuance of SEC-registered covered bonds?

None of the Canadian banks have publicly answered these questions, so at this writing it is unclear what course they will follow in connection with their US dollar covered bond offerings.  If they conclude that SEC-registered covered bonds are not cost effective, it is likely they would take the alternative of issuing US dollar covered bonds under Rule 144A.