SEC’s proposed permanent exemption from Rule 17g-5 for non-US issuers


On 26 September, the US Securities and Exchange Commission (SEC) proposed a permanent exemption from Rule 17g-5 with respect to credit ratings if:

(i) the issuer of the security or money market instrument referred to in the rule is not a US person; and 

(ii) a nationally recognized statistical rating organization (NRSRO) has a reasonable basis to conclude that all offers and sales of such security or money market instrument by any issuer, sponsor, or underwriter linked to such security or money market instrument will occur outside the US. 

Rule 17g-5 imposes additional disclosure and conflict of interest requirements on NRSROs and, by extension, additional disclosure requirements on issuers, sponsors, and underwriters of structured finance products. 

The SEC has provided orders extending temporary conditional exemptions for NRSROs from requirements of Rule 17g-5 in the past, following previously submitted joint letters from SFIG and the ASF. If adopted, the proposed rule effectively would make permanent the temporary conditional relief that is currently provided by the SEC.

Update: 

See Comments to Proposed Amendments to Codify Exemption to Credit Rating Agency Rule (PDF) submitted to the SEC on behalf of SFIG and the ASF on 5 November 2018

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