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September 26, 2018

SEC is proposing amendments to codify an existing temporary exemption for credit rating agencies (CRAs) registered with SEC as nationally recognized statistical rating organizations (NRSROs). SEC is seeking public comments on the amendments to Rule 17g-5(a)(3), Rule 17g-7(a), and Rule 15Ga-2 for 30 days following the publication of this proposal in the Federal Register.

The proposed amendments would codify the existing temporary exemption to Rule 17g-5(a)(3) and clarify the conditions of the exemption. Rule 17g-5(a)(3) under the Securities Exchange Act established a program to provide information necessary to determine the credit rating of a structured finance product to NRSROs that were not hired by the issuer, sponsor, or underwriter of the structured finance product. Prior to the compliance date for Rule 17g‑5(a)(3), SEC granted a temporary conditional exemption to the rule for certain structured finance products issued by non-U.S. persons and offered and sold outside the United States. SEC subsequently extended this exemption.

In addition, the amendments would make conforming changes to similar exemptions in two other Exchange Act rules. The proposed amendments would clarify the conditions applicable to similar exemptions in Exchange Act Rules 17g-7(a) and 15Ga-2 to ensure that the approach among these exemptions remains consistent. Rule 17g-7(a) requires an NRSRO to disclose certain information when it publishes a rating action. Rule 15Ga-2 requires an issuer or underwriter to disclose the findings and conclusions of any third-party due diligence report it obtains with respect to an asset-backed security that is to be rated by an NRSRO.


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Comment Due Date: FR + 30 Days


Keywords: Americas, US, Securities, Structured Finance, Temporary Exemption, NRSRO, CRA, SEC

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