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NRSRONationally Recognized Statistical Rating Organization
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In response to this pressure, the SEC issued a 2003 Concept Release, Ratings Agencies and the Use of Credit Ratings under the Federal Securities Laws, which considered the following issues: NRSRO alternatives, recognition criteria for NRSROs, information flow and ratings processes, conflicts of interest, unfair practices, rating triggers, and regulatory oversight ( concept/33-8236.htm).
The Securities and Exchange Commission (SEC) has issued a report summarising the staff's observations and concerns arising from the examinations of 10 credit rating agencies registered with the SEC as Nationally Recognized Statistical Rating Organizations (NRSROs) and subject to Commission oversight.
Yet an NRSRO can't be un-dubbed: The SEC normally can't strip a Nationally Recognized Statistical Rating Organization of its designation.
Until that time, only five agencies were granted NRSRO status, two of which were later acquired by one of the "big three," again leaving only Moody's, S&P and Fitch to rate the nation's public sector debt.
The three agencies were grandfathered in when the Securities and Exchange Commission created the NRSRO system in 1975, which effectively set them up as the main credit rating arbiters.
District Court for the Southern District of New York recognized typical First Amendment protections for NRSRO credit ratings because they are matters of public concern.
NYU professor Lawrence White recommended an elimination of the NRSRO designation at a Senate hearing last fall.
Hybrids are rated by NRSROs, and each of the rating agencies evaluates each issue and reflects varying levels of "debt-like" risks and "equity-like" risks.
The NRSRO designation, however, had become a significant regulatory barrier to entry into the bond rating business and a significant regulatory protection for the incumbents.
Since NRSROs were created in 1975, the importance of the NRSRO stamp of approval grew far more than anticipated.
* Regulators should allow other rating firms the opportunity to earn NRSRO designation.
New York: Fitch Ratings, a nationally recognized statistical rating organization (NRSRO) designated by the U.S.