US regulation of debt capital markets—one minute guide
US regulation of debt capital markets—one minute guide

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • US regulation of debt capital markets—one minute guide
  • Introduction
  • Rule 144A and Regulation S
  • 10b-5 letter
  • TEFRA C and D Rules
  • Securities and Exchange Commission
  • The Commodity Futures Trading Commission
  • Registration and reporting requirements for foreign private issuers
  • State securities (blue sky) laws

Introduction

The US provisions which are most relevant to international issues of debt securities outside the US are:

  1. the exemptions granted under Rule 144A and Regulation S of the Securities Act of 1933 (the Securities Act), and

  2. US Treasury Regulations section 1.163 5(c)(2)(i)(C) and (D) (TEFRA C and D Rules).

The regulatory bodies in the US with most relevance to international securities issues (and to related derivatives transactions) are:

  1. the Securities and Exchange Commission (SEC), and

  2. the Commodity Futures Trading Commission (CFTC)

For more information, see Practice Note: USA—Financial services regulation essentials.

Rule 144A and Regulation S

Rule 144A is a safe harbour exemption for resales of securities from the registration requirements of section 5 (15 USCS § 77e) of the Securities Act. Rule 144A applies to certain offers and sales of qualifying securities by certain persons other than the issuer of the securities. The exemption applies to resales of securities to 'qualified institutional buyers' (QIBs). QIBs are typically large institutional investors with securities portfolios that exceed US$ 100m.

There are four conditions to reliance on Rule 144A:

  1. the resale is made only to a QIB or to a purchaser that the re-seller (and any person acting on its behalf) reasonably believes is a QIB

  2. the re-seller (or any person acting on its behalf) must take reasonable steps to ensure that