OREANDA-NEWS. June 17, 2015. Fitch Ratings has revised its special report describing the representations, warranties, and enforcement mechanisms (RW&Es) that the agency typically sees in structured finance transactions. The revisions were necessitated by the Securities and Exchange Commission's (the SEC) release of the final version of Rule 17g-7 (the Final Rule), which will become effective on June 15, 2015.

As part of the Final Rule, the SEC has narrowed the scope of rule 17g-7 to those RW&Es contained in a transaction's offering documents and that relate to the underlying asset pool. In addition, the Final Rule states that the description and comparison of a transaction's RW&Es only needs to be made in connection with the assignment of expected ratings, initial ratings, and for the first rating action taken following a material change in a transaction's RW&Es.

Fitch has revised its special report titled 'Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions' (the report) to reflect the Final Rule. As such, the asset-specific appendices to the report have been revised to describe the RW&Es that Fitch typically sees in the offering documents for structured finance transactions and that relate to the underlying asset pools.

Fitch will continue to comment in an appendix to the transaction's presale or new issue report on how the transaction's RW&Es compare with the typical RW&Es for that asset class, as described in the report, and will also continue to highlight additional or omitted RW&Es that relate to the asset pool. In this manner, investors will have a better understanding of how the transaction's RW&Es compare with similar securities' RW&Es. Transaction-specific RW&Es appendices published by Fitch on or after June 15, 2015 will reflect the Final Rule.

The SEC's adoption of Rule 17g-7 initially required Nationally Recognized Statistical Rating Organizations to include in credit reports a description of all RW&Es available to investors and a comparison to 'similar securities.' The Rule was initially applicable to all transactions rated on or after Sept. 26, 2011. Fitch will continue to publish the original version of its Report so that it may be referenced for transactions initially rated between Sept. 26, 2011 and June 15, 2015.

The definitions of 'typical' RW&Es are expected to remain somewhat fluid as industry standards in many areas of structured finance continue to evolve. Periodically, Fitch intends to update this report and, in particular, the various asset-level appendices to reflect the developments in standards.
The full report, 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions,' is available at 'www.fitchratings.com.'