[Federal Register Volume 76, Number 129 (Wednesday, July 6, 2011)]
[Notices]
[Pages 39411-39413]
[FR Doc No: 2011-16890]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

[Docket No. USCG-2011-0012]

Self-Defense of Vessels of the United States

AGENCY: Coast Guard, DHS.

ACTION: Notice of policy.

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SUMMARY: The Coast Guard has completed a review of policy and public
comments received regarding standard rules for the use of force for
self-defense of vessels of the United States as described in the Coast
Guard Authorization Act of 2010. It has determined that the existing
guidance regarding the use of force provides an adequate framework for
standard rules for the use of force for self-defense against piracy.

DATES: This notice is effective on July 6, 2011.

ADDRESSES: The policy letter and other documents mentioned in this
preamble as being available in the docket, are part of docket USCG-
2011-0012 and are available for inspection or copying at the Docket
Management Facility, U.S. Department of Transportation, West Building
Ground floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC
20590-0001, between 9 a.m. and 5 p.m., Monday through Friday, except
Federal holidays. You may also find this docket on the Internet at
http://www.regulations.gov.
    This policy is also available on the U.S. Coast Guard's Homeport
Web site at http://homeport.uscg.mil by clicking the International Port
Security Program tab > Port Security Advisory > Port Security Advisory
(03-09).

FOR FURTHER INFORMATION CONTACT: If you have questions concerning the
policy, please call LCDR John Reardon, Office of Maritime and
International Law, United States Coast Guard; telephone<PHONE_NUMBER>,
e-mail<EMAIL_ADDRESS>If you have questions on viewing the
docket, call Ms. Renee V. Wright, Program Manager, Docket Operations,
telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Background and Purpose

    The Coast Guard is publishing this notice to affirm that guidance
published by the Coast Guard, in Port Security Advisory (PSA) 03-09,
provides adequate guidance on conduct relating to section 912 of the
Coast Guard Authorization Act of 2010 (CGAA). Section 912 of the CGAA
states that an owner, operator, time charterer, master, mariner, or
individual who uses force or authorizes the use of force to defend a
vessel of the United States against an act of piracy shall not be
liable for monetary damages for any injury or death caused by such
force to any person engaging in an act of piracy if such force was in
accordance with standard rules for the use of force in self-defense of
vessels prescribed by the Secretary.
    In accordance with Section 912 of the CGAA, the Coast Guard
requested input from the public and representatives of industry and
labor in order to determine if the current authorization in 33 U.S.C.
383, Resistance of Pirates by Merchant Vessels, and Coast Guard
guidance in PSA 3-09 provides an adequate framework for standard rules
for the use of force for self-defense of vessels of the United States.
76 FR 4706. The Coast Guard received eleven comments, which are
available in the public docket found on http://www.regulations.gov.
After review of the comments received, the Coast Guard has determined
the policy regarding standard rules for the

use of force for self-defense or defense of others is sufficient.
    The majority of the comments were supportive of the overall current
guidance and stated the well-established rights of self-defense of
seafarers in 33 U.S.C. 383, accompanied by the advisory guidelines of
PSA 3-09, are an adequate framework. One comment stated that PSA 3-09
constitutes sufficient information to be considered standard rules and
requires no alteration. Another comment stated that PSA 3-09 adequately
describes the masters' authority and discretion in the use of self-
defense and did not believe more specific guidance was necessary. The
comment further stated that 33 U.S.C. 383 and the Coast Guard
Authorization Act of 2010 section 912 provided sufficient immunity for
persons defending vessels.
    Of the eleven comments received, several were outside the scope of
the guidance, but were constructive suggestions on potential tactics
and operations. These comments are helpful and will be considered
during routine reviews and updates to other advisories and guidance.
For example, three comments urged further deployment of heavier weapons
and suggested a legal exemption for merchant vessels to carry machine
guns and rocket propelled grenades and for the use of military weapons
not permitted under U.S. law. Another urged that restrictions on
import/export of weapons be lifted and the international community be
pressured to allow deployment of weapons. One commenter suggested that
the Coast Guard provide additional guidance on the use of non-deadly
force options, including pepper spray and other chemical repellants.
Additionally, one comment encouraged the use of Special Forces to
respond to hostage situations. One comment noted that armed security
teams onboard its vessels had successfully deterred attacks. Other
comments noted that the safe room concept (``citadel'') should be
reviewed. The Coast Guard continues to examine these and other issues
in consultation with interagency and industry partners to ensure the
continued development of guidance in responding to piracy.
    Given the existing guidance and the public support for that
guidance as revealed in the comments, the Coast Guard has determined
that the current authorization in 33 U.S.C. 383, Resistance of Pirates
by Merchant Vessels, and the guidance published by the Coast Guard in
Port Security Advisory 3-09 provide an adequate framework for standard
rules for the use of force for self-defense. We have reproduced the
text of Port Security Advisory 03-09 below.

Port Security Advisory (03-09)

Subject: Guidance on Self-Defense or Defense of Others by U.S. Flagged
Commercial Vessels Operating in High Risk Waters

1. Purpose

    This document is intended to provide guidance to U.S. flagged
commercial vessels and embarked personnel, including contract security
personnel, not entitled to sovereign immunity and operating in High
Risk Waters (HRW),\1\ for employment of force in self-defense or
defense of others, as well as defense of the vessel. This guidance does
not apply to U.S. flagged vessels entitled to sovereign immunity. It
does not apply to U.S. Government personnel, civilian or military,
embarked on non-sovereign-immune U.S. flagged commercial vessels to
provide vessel security. This document restates existing law in this
area. It does not establish new standards or duties with respect to the
right of self-defense or defense of others. The examples provided
herein are included merely to illustrate how the outlined principles
could apply to the issue of piracy. Actual situations will vary, based
on the specific circumstances of a ship's defensive measures and
capabilities at hand, and the facts of the situation confronted. This
document does not prescribe rules of engagement. Rather, it provides
guidance intended to aid companies in the development of their vessel
security plan submissions for operating within HRW. This guidance
should not be read to mandate specific actions at particular points of
time. Nothing in this document prevents an individual from acting in
self-defense or defense of others. In addition to the right of self-
defense and defense of others, 33 U.S.C. 383 provides authority for the
master and crew to respond to a piratical attack, authorizing them to
``oppose and defend against any aggression, search, restraint,
depredation, or seizure, which shall be attempted upon such vessel * *
*''
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    \1\ This guidance anticipates that contracted security personnel
may be embarked on U.S. flagged merchant ships operating in HRW, but
may also or alternatively be embarked on U.S. flagged vessels (not
entitled to sovereign immunity) providing a security escort for a
U.S. flagged merchant ship operating in HRW. See USCG Minimum
Guidelines for Contracted Security Services in High Risk Waters for
additional guidance relevant to contracted security personnel.
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2. Definitions

    The following definitions apply for the purpose of this guidance:
    a. Self-defense or defense of others means the act of thwarting an
attack upon oneself, another person, or both by using force, up to and
including deadly force.
    b. Defense of the vessel means the act of using force to prevent
damage to or theft of a vessel or its property. It is a concept
separate from defending individuals embarked aboard the vessel. That is
intended to be covered within the definition self-defense or defense of
others.
    c. Imminent means may occur at any moment, ready to take place,
impending, threateningly or menacingly near or at hand.
    d. Imminent danger means an attacker poses an imminent threat of
great bodily harm or death to oneself or others.
    Examples of imminent danger include, but are not limited to, aiming
or firing weapons at a U.S. flagged vessel with individuals embarked,
or an attempted armed, non-consensual boarding, without legal
authority, of a U.S. flagged vessel by another vessel (other than U.S.
or foreign warships, law enforcement vessels, or other vessels clearly
marked as being on non-commercial government service). It might also
include the act of brandishing weapons directed at crewmembers or
security personnel, where there is a reasonable belief that the
attacker(s) also has the means and opportunity to inflict great bodily
harm or death on the individual or others in the vicinity. The
determination of imminent danger is fact dependent, and the law may be
broader than the paradigm outlined above. Although the law may allow
for other considerations, or use slightly differing terminology based
on an individual's particular circumstances, the Coast Guard uses the
following as a helpful training tool for its members to explain the
concept: Imminent danger would exist when an attacker manifests
apparent intent to cause great bodily harm or death to oneself or
others, as demonstrated by the following elements, each of which is
present at the same time:
    (1) Means. The attacker has the apparent ability, either physically
(relative size, strength, expertise, or other attributes) or through
the use of an object(s), to inflict great bodily harm or death to
oneself or others. Physical means can include in some circumstances the
use of hands or feet to choke or beat an individual. Objects can
include weapons e.g., firearms, explosives, knives, etc.), as well as
other devices under the control of the attacker;
    (2) Opportunity. The combination of circumstances by which an
attacker

apparently can cause great bodily harm or death to oneself or others
(e.g., access to a weapon that is within range to be used against
oneself or others); and
    (3) Act. The attacker makes an overt movement which induces one to
reasonably believe that he is manifesting a threat to cause great
bodily harm or death to oneself or others (e.g., an attacker points or
discharges a firearm or other weapon at crewmembers or security
personnel, or employs or prepares to employ climbing gear for an armed,
non-consensual boarding).
    e. Great bodily harm means an injury to the body that results in
unconsciousness, protracted and obvious disfigurement, or protracted
loss or impairment of the function of a bodily member, organ, or mental
faculty. It is synonymous with ``serious bodily injury'', ``serious
bodily harm'', ``serious physical injury'', or ``grievous bodily
injury''.
    f. Force means the affirmative application of techniques or
actions, typically listed within the vessel security plan, directed
against a specific vessel or person(s).
    g. Non-deadly force means any force other than deadly force.
    h. Deadly force means any force that is likely to cause great
bodily harm or death.
    i. Warning shot means a signal to a vessel to stop. The term does
not include shots fired as a signal that the use of deadly force is
imminent, a technique that should not be employed.

3. Guidance

a. Guiding Principles
    Vessel masters retain control of and authority over their vessels,
crewmembers, and embarked security personnel at all times. Any use of
force employed in accordance with the guidance set forth herein is
subject to the direction of the vessel master. Only that force
reasonably necessary under the circumstances should be used. Nothing in
the application of this guidance shall be construed as to necessarily
require personnel to meet force with equal or lesser force.
b. Self-defense or Defense of Others
    In the exercise of self-defense or defense of others, crew and
security personnel may use all available means to apply that force
reasonably necessary to defend themselves or others from harm,
including the use of deadly force if required.
c. Use of Deadly Force
    Subject to the above, deadly force may only be used in self-defense
or defense of others, when an individual has the reasonable belief that
the person or persons to which the deadly force would be directed poses
an imminent danger of death or great bodily harm. The objective when
using deadly force in self-defense or defense of others is defense of
life. The use of deadly force in self-defense or defense of others may
include the use of ordnance fired into a vessel, if necessary for self-
defense or defense of others. Accordingly, when confronted with a
person or vessel that poses an imminent danger of death or great bodily
harm, personnel and vessels to which this guidance applies may use
reasonable force, up to and including deadly force, in self-defense or
defense of others.
d. Use of Non-Deadly Force
    Subject to the above, non-deadly force may be used in the following
circumstances:
    (1) for self-defense or defense of others.
    (2) for defense of the vessel.
    (3) to prevent the theft or, intentional damage to, or destruction
of property (including the U.S. flagged vessel) that the master, crew,
or security personnel are authorized to protect.
    Non-deadly force tactics could include maneuvers by the vessel,
deployment of sonic blasts, use of fire hoses to flood a vessel
threatening to attack, the use of disabling fire by properly trained
personnel, or other non-lethal means employed by crewmembers or
security personnel, directed at a vessel or persons threatening attack.
e. Retreat
    Although not required under the law, retreat (e.g., to a safe room)
may be an appropriate alternative to the use of force and may be the
most reasonable choice under the circumstances. This is particularly
appropriate where disengaging temporarily from a confrontational
situation may reduce tensions, mitigate risk, reduce a potential
threat, and provide time for the arrival of additional assets or
personnel, including military or law enforcement assets or personnel.
U.S. flagged vessels and embarked persons, including crew and security
personnel, are not required to retreat to avoid situations in which the
use of force, including deadly force, is appropriate.
f. Defense of the Vessel and Other Property
    Masters always retain the inherent right to use force in defense of
the vessel. Masters must inform the crew and security personnel of
their authority to employ force in defense of the vessel. Masters may
restrain the authority of the crew and security personnel to employ
force in defense of the vessel. If a master withholds from the crew or
security personnel any use of force authority for defense of the
vessel, the master must approve the withheld portion prior to its use
in defense of the vessel. Defense of the vessel alone does not justify
deadly force. Unless otherwise directed by a master, the crew and
security personnel may use non deadly force in defense of the vessel.
Masters should consider all the circumstances when employing force, and
resort to deadly force only when there is imminent danger of death or
great bodily harm.
g. Use of Signals
    Signals, including firing of warning shots, may be employed, but
are not required. Warning shots are not a use of force, and should not
be used if they will endanger any persons or property. Moreover,
warning shots should not be used as a signal that the use of deadly
force is imminent.

4. The Conditions of Entry Applicable to Vessels Outlined in Port
Security Advisory 1-09 Remain in Effect

Conclusion

    As a result of this review, there will be no change to the policy.
The Coast Guard will routinely review and update the policy as needed.

    Dated: June 29, 2011.
Kevin S. Cook,
Rear Admiral, U.S. Coast Guard, Director of Prevention Policy.
[FR Doc. 2011-16890 Filed 7-5-11; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register: November 29, 2010 (Volume 75, Number 228)]
[Notices]
[Page 73137-73139]
[DOCID:fr29no10-139]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63363; File No. S7-04-09]

Order Extending Temporary Conditional Exemption for Nationally
Recognized Statistical Rating Organizations From Requirements of Rule
17g-5 Under the Securities Exchange Act of 1934 and Request for Comment

November 23, 2010.

I. Introduction

    On May 19, 2010, the Securities and Exchange Commission
(``Commission'') conditionally exempted, with respect to certain credit
ratings and until December 2, 2010, nationally recognized statistical
rating organizations (``NRSROs'') from certain requirements in Rule
17g-5(a)(3) \1\ under the Securities Exchange Act of 1934 (``Exchange
Act''), which had a compliance date of June 2, 2010.\2\ Pursuant to the
Order, an NRSRO is not required to comply with Rule 17g-5(a)(3) until
December 2, 2010 with respect to credit ratings where: (1) The issuer
of the structured finance product is a non-U.S. person; and (2) the
NRSRO has a reasonable basis to conclude that the structured finance
product will be offered and sold upon issuance, and that any arranger
linked to the structured finance product will effect transactions of
the structured finance product after issuance, only in transactions
that occur outside the U.S. (``covered transactions'').\3\ The
Commission is extending the temporary conditional exemption exempting
NRSROs from complying with Rule 17g-5(a)(3) with respect to rating
covered transactions until December 2, 2011.
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    \1\ See 17 CFR 240.17g-5(a)(3).
    \2\ See Securities Exchange Act Release No. 62120 (May 19,
2010), 75 FR 28825 (May 24, 2010) (``Order'').
    \3\ See id. at 28827-28 (setting forth conditions of relief).
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II. Background

    Rule 17g-5 identifies, in paragraphs (b) and (c) of the rule, a
series of conflicts of interest arising from the business of
determining credit ratings.\4\ Paragraph (a) of Rule 17g-5 \5\
prohibits an NRSRO from issuing or maintaining a credit rating if it is
subject to the conflicts of interest identified in paragraph (b) of
Rule 17g-5 unless the NRSRO has taken the steps prescribed in paragraph
(a)(1) (i.e., disclosed the type of conflict of interest in Exhibit 6
to Form NRSRO in accordance with Section 15E(a)(1)(B)(vi) of the
Exchange Act \6\ and Rule 17g-1) \7\ and paragraph (a)(2) (i.e.,
established and is maintaining and enforcing written policies and
procedures to address and manage conflicts of interest in accordance
with Section 15E(h) of the Exchange Act).\8\ Paragraph (c) of Rule 17g-
5 specifically prohibits seven types of conflicts of interest.
Consequently, an NRSRO is prohibited from issuing or maintaining a
credit rating when it is subject to these conflicts regardless of
whether it had disclosed them and established procedures reasonably
designed to address them.
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    \4\ 17 CFR 240.17g-5(b) and (c).
    \5\ 17 CFR 240.17g-5(a).
    \6\ 15 U.S.C. 78o-7(a)(1)(B)(vi).
    \7\ 17 CFR 240.17g-1.
    \8\ 15 U.S.C. 78o-7(h).
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    In December 2009, the Commission adopted subparagraph (a)(3) to
Rule 17g-5. This provision requires an NRSRO that is hired by an
arranger to determine an initial credit rating for a structured finance
product to take

certain steps designed to allow an NRSRO that is not hired by the
arranger to nonetheless determine an initial credit rating--and
subsequently monitor that credit rating--for the structured finance
product.\9\ In particular, under Rule 17g-5(a)(3), an NRSRO is
prohibited from issuing or maintaining a credit rating when it is
subject to the conflict of interest identified in paragraph (b)(9) of
Rule 17g-5 (i.e., being hired by an arranger to determine a credit
rating for a structured finance product) \10\ unless it has taken the
steps prescribed in paragraphs (a)(1) and (2) of Rule 17g-5 (discussed
above) and the steps prescribed in new paragraph (a)(3) of Rule 17g-
5.\11\ Rule 17g-5(a)(3), among other things, requires that the NRSRO
must:
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    \9\ See 17 CFR 240.17g-5(a)(3); see also Securities Exchange Act
Release No. 61050 (November 23, 2009), 74 FR 63832 (``Adopting
Release'') at 63844-45.
    \10\ Paragraph (b)(9) of Rule 17g-5 identifies the following
conflict of interest: issuing or maintaining a credit rating for a
security or money market instrument issued by an asset pool or as
part of any asset-backed or mortgage-backed securities transaction
that was paid for by the issuer, sponsor, or underwriter of the
security or money market instrument. 17 CFR 240.17g-5(b)(9).
    \11\ 17 CFR 240.17g-5(a)(3).
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     Maintain on a password-protected Internet Web site a list
of each structured finance product for which it currently is in the
process of determining an initial credit rating in chronological order
and identifying the type of structured finance product, the name of the
issuer, the date the rating process was initiated, and the Internet Web
site address where the arranger represents the information provided to
the hired NRSRO can be accessed by other NRSROs;
     Provide free and unlimited access to such password-
protected Internet Web site during the applicable calendar year to any
NRSRO that provides it with a copy of the certification described in
paragraph (e) of Rule 17g-5 that covers that calendar year; \12\ and
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    \12\ Paragraph (e) of Rule 17g-5 requires that an NRSRO seeking
to access the hired NRSRO's Internet website during the applicable
calendar year must furnish the Commission with the following
certification:
    The undersigned hereby certifies that it will access the
Internet Web sites described in 17 CFR 240.17g-5(a)(3) solely for
the purpose of determining or monitoring credit ratings. Further,
the undersigned certifies that it will keep the information it
accesses pursuant to 17 CFR 240.17g-5(a)(3) confidential and treat
it as material nonpublic information subject to its written policies
and procedures established, maintained, and enforced pursuant to
section 15E(g)(1) of the Act (15 U.S.C. 78o-7(g)(1)) and 17 CFR
240.17g-4. Further, the undersigned certifies that it will determine
and maintain credit ratings for at least 10% of the issued
securities and money market instruments for which it accesses
information pursuant to 17 CFR 240.17g-5(a)(3)(iii), if it accesses
such information for 10 or more issued securities or money market
instruments in the calendar year covered by the certification.
Further, the undersigned certifies one of the following as
applicable: (1) In the most recent calendar year during which it
accessed information pursuant to 17 CFR 240.17g-5(a)(3), the
undersigned accessed information for [Insert Number] issued
securities and money market instruments through Internet Web sites
described in 17 CFR 240.17g-5(a)(3) and determined and maintained
credit ratings for [Insert Number] of such securities and money
market instruments; or (2) The undersigned previously has not
accessed information pursuant to 17 CFR 240.17g-5(a)(3) 10 or more
times during the most recently ended calendar year.
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     Obtain from the arranger a written representation that can
reasonably be relied upon that the arranger will, among other things,
disclose on a password-protected Internet web site the information it
provides to the hired NRSRO to determine the initial credit rating (and
monitor that credit rating) and provide access to the web site to an
NRSRO that provides it with a copy of the certification described in
paragraph (e) Rule 17g-5.\13\
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    \13\ In particular, under paragraph (a)(3)(iii) of Rule 17g-5,
the arranger must represent to the hired NRSRO that it will:
    (1) Maintain the information described in paragraphs
(a)(3)(iii)(C) and (a)(3)(iii)(D) of Rule 17g-5 available at an
identified password-protected Internet Web site that presents the
information in a manner indicating which information currently
should be relied on to determine or monitor the credit rating;
    (2) Provide access to such password-protected Internet Web site
during the applicable calendar year to any NRSRO that provides it
with a copy of the certification described in paragraph (e) of Rule
17g-5 that covers that calendar year, provided that such
certification indicates that the nationally recognized statistical
rating organization providing the certification either: (i)
Determined and maintained credit ratings for at least 10% of the
issued securities and money market instruments for which it accessed
information pursuant to paragraph (a)(3)(iii) of Rule 17g-5 in the
calendar year prior to the year covered by the certification, if it
accessed such information for 10 or more issued securities or money
market instruments; or (ii) has not accessed information pursuant to
paragraph (a)(3) of Rule 17g-5 10 or more times during the most
recently ended calendar year.
    (3) Post on such password-protected Internet Web site all
information the arranger provides to the NRSRO, or contracts with a
third party to provide to the NRSRO, for the purpose of determining
the initial credit rating for the security or money market
instrument, including information about the characteristics of the
assets underlying or referenced by the security or money market
instrument, and the legal structure of the security or money market
instrument, at the same time such information is provided to the
NRSRO; and
    (4) Post on such password-protected Internet Web site all
information the arranger provides to the NRSRO, or contracts with a
third party to provide to the NRSRO, for the purpose of undertaking
credit rating surveillance on the security or money market
instrument, including information about the characteristics and
performance of the assets underlying or referenced by the security
or money market instrument at the same time such information is
provided to the NRSRO.
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    The Commission stated in the Adopting Release that subparagraph
Rule 17g-5(a)(3) is designed to address conflicts of interest and
improve the quality of credit ratings for structured finance products
by making it possible for more NRSROs to rate structured finance
products.\14\ For example, the Commission noted that when an NRSRO is
hired to rate a structured finance product, some of the information it
relies on to determine the rating is generally not made public.\15\ As
a result, structured finance products frequently are issued with
ratings from only the one or two NRSROs that have been hired by the
arranger, with the attendant conflict of interest that creates.\16\ The
Commission stated that subparagraph Rule 17g-5(a)(3) was designed to
increase the number of credit ratings extant for a given structured
finance product and, in particular, to promote the issuance of credit
ratings by NRSROs that are not hired by arrangers.\17\ The Commission's
goal in adopting the rule was to provide users of credit ratings with
more views on the creditworthiness of structured finance products.\18\
In addition, the Commission stated that Rule 17g-5(a)(3) was designed
to reduce the ability of arrangers to obtain better than warranted
ratings by exerting influence over NRSROs hired to determine credit
ratings for structured finance products.\19\ Specifically, by opening
up the rating process to more NRSROs, the Commission intended to make
it easier for the hired NRSRO to resist such pressure by increasing the
likelihood that any steps taken to inappropriately favor the arranger
could be exposed to the market through the credit ratings issued by
other NRSROs.\20\
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    \14\ Adopting Release at 63844.
    \15\ Id.
    \16\ Id.
    \17\ Id.
    \18\ Id.
    \19\ Id.
    \20\ Id.
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    Rule 17g-5(a)(3) became effective on February 2, 2010, and the
compliance date for Rule 17g-5(a)(3) was June 2, 2010.

III. Extension of Conditional Temporary Extension

    In the Order, the Commission requested comment generally, but also
on a number of specific issues.\21\ The Commission received six
comments in response to this solicitation of comment.\22\ The
commenters continue

to express concern that the extraterritorial application of Rule 17g-
5(a)(3) could, in the commenter's view, among other things, disrupt
local securitization markets,\23\ inhibit the ability of local firms to
raise capital,\24\ and conflict with local laws.\25\ Several commenters
also requested that the conditional temporary exemption be extended or
made permanent.\26\ Given the continued concerns about potential
disruptions of local securitization markets, and because the
Commission's consideration of the issues raised will benefit from
additional time to engage in further dialogue with interested parties
and to monitor market and regulatory developments, the Commission
believes extending the conditional temporary exemption until December
2, 2011 is necessary or appropriate in the public interest, and is
consistent with the protection of investors.
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    \21\ See Order, supra note 2, at 28828.
    \22\ Letter from Masamichi Kono, Vice Commissioner for
International Affairs, Financial Services Agency, Japan, to
Elizabeth Murphy, Secretary, Commission, dated Nov. 12, 2010
(``Japan FSA Letter''); Letter from Masaru Ono, Executive Director,
Securitization Forum of Japan, to Elizabeth Murphy, Secretary,
Commission, dated Nov. 12, 2010 (``SFJ Letter''); Letter from Rick
Watson, Managing Director, Association for Financial Markets in
Europe/European Securitisation Forum, to Elizabeth Murphy,
Secretary, Commission, dated Nov. 11, 2010 (``AFME Letter''); Letter
from Jack Rando, Director, Capital Markets, Investment Industry
Association of Canada, to Randall Roy, Assistant Director, Division,
Commission, dated Sep. 22, 2010 (``IIAC Letter''); Letter from
Christopher Dalton, Chief Executive Officer, Australian
Securitisation Forum, to Randall Roy, Assistant Director, Division,
Commission, dated Jun. 27, 2010 (``AuSF Letter''); Letter from
Takefumi Emori, Managing Director, Japan Credit Rating Agency, Ltd.
(``JCR'') to Elizabeth Murphy, Secretary, Commission, dated Jun. 25,
2010 (``JCR Letter'').
    \23\ See Japan FSA Letter; SFJ Letter; AFME Letter; JCR Letter,
AuSF Letter.
    \24\ See AFME Letter; JCR Letter; AuSF Letter.
    \25\ See Japan FSA Letter; AFME Letter; JCR Letter; AuSF Letter;
IIAC Letter. With respect to local laws, we note that the European
Commission in recent months has issued a relevant proposal for
amendments to the European Union Regulation on Credit Ratings. See
``Regulation of the European Parliament and of the Counsel on
amending Regulation (EC) No 1060/2009 on credit rating agencies''
(available at http://ec.europa.eu/internal_market/securities/docs/
agencies/100602_proposal_en.pdf).
    \26\ See Japan FSA Letter; SFJ Letter; AFME Letter; JCR Letter.
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IV. Request for Comment

    The Commission believes that it would be useful to continue to
provide interested parties opportunity to comment. Comments may be
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/exorders.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number S7-04-09 on the subject line; or
     Use the Federal eRulemaking Portal (http://
www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F St., NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number S7-04-09. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet website (http://www.sec.gov/rules/exorders.shtml). Comments
are also available for website viewing and printing in the Commission's
Public Reference Room, 100 F St. NE., Washington, DC 20549 on official
business days between the hours of 10 a.m. and 3 p.m. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.

V. Conclusion

    For the foregoing reasons, the Commission believes it would be
necessary or appropriate in the public interest and consistent with the
protection of investors to extend the conditional temporary exemption
exempting NRSROs from complying with Rule 17g-5(a)(3) with respect to
rating covered transactions until December 2, 2011.

Accordingly

    It is hereby ordered, pursuant to Section 36 of the Exchange Act,
that a nationally recognized statistical rating organization is exempt
until December 2, 2011 from the requirements in Rule 17g-5(a)(3) (17
CFR 240.17g-5(a)(3)) for credit ratings where:
    (1) The issuer of the security or money market instrument is not a
U.S. person (as defined under Securities Act Rule 902(k)); and
    (2) The nationally recognized statistical rating organization has a
reasonable basis to conclude that the structured finance product will
be offered and sold upon issuance, and that any arranger linked to the
structured finance product will effect transactions of the structured
finance product after issuance, only in transactions that occur outside
the U.S.

By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-29929 Filed 11-26-10; 8:45 am]
BILLING CODE 8011-01-P