Rule 17g-5(a)(3)

SEC Extends NRSRO Extraterritorial Exemption from Rule 17g-5

On November 16, the SEC extended the temporary conditional exemption for NRSROs from complying with Rule 17g-5(a)(3) for rating covered transactions until December 2, 2012. Rule 17g-5(a)(3) requires that an NRSRO must maintain a password-protected website containing the information provided to it by the arranger for each structured finance product for which it is in the process of determining a credit rating. Under the exemption, an NRSRO is not required to comply with Rule 17g-5(a)(3) where: (i) the issuer is a non-U.S. person and (ii) the NRSRO reasonably believes that the structured finance products will be sold only outside of the U.S. SEC Release.

Rule 17g-5 Exemption for Non-U.S. Persons

On May 19, the SEC issued an exemptive order stating that an NRSRO is not required to comply with Rule 17g-5(a)(3) until December 2 with respect to credit ratings for structured finance transactions where:  (i) the issuer of the structured finance product is a non-U.S. person, and (ii) the NRSRO has a reasonable basis to conclude that the structured finance product will be offered and sold upon issuance, and that any arranger will effect transactions of the structured finance product after issuance outside of the U.S.  The SEC is also requesting comments on the application of Rule 17g-5(a)(3) to transactions outside of the U.S. SEC Exemptive Order.