Commercial paper is short-term unsecured notes, typically

• With maturities of 30 to 90 days
• Issued by finance companies and banking companies
• Bought by money-market funds
• Sold with a $25,000 minimum denomination
• Having a high credit rating

Sold without Securities Act registration
using the §3(a)(3) exemption

Back-up lines of credit are often used
to ensure payment on maturity

Text of Release

Provides key guidance on § 3(a)(3) exemption

Applies to commercial paper if:

• Of prime quality and negotiable
• "Of a type not ordinarily purchased by the general public"
• Issued to facilitate current transactions
• Of a type eligible for discounting by Federal Reserve banks
• Have a maturity not exceeding nine months

§ 3(a)(3) doesn't apply to
obligations payable on demand or
having provision for automatic "roll over"

For several years SEC has considered
defining prime quality

Telephone Manual (1999)

Since 1990, SEC staff no-longer issues
no-action letters on 3(a)(3) exemptions

Associates Corporation ("ACONA") (1987)

SunTrust Banks (1985)

First Jersey National (1985)

Oxford First (1983)

Gillette  (1984)

Western Bancorp Credit (1980)

Robertshaw Controls (1979)

Orbanco, Inc (1979)

First National State Bancorporation (1979)

Oracle CP Program (2006)

Cendant CP Program (2005)

Exempt Securities