Reuters: Regulatory News: SEC could see more credit rating agency applications

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SEC could see more credit rating agency applications Jul 18th 2012, 19:37 NEW YORK, July 18 | Wed Jul 18, 2012 3:37pm EDT NEW YORK, July 18 (Reuters) - More credit rating agencies could soon apply to register with the Securities and Exchange Commission, an SEC official told Reuters this week, potentially bringing the total number of nationally recognized agencies back into the double digits. "We're well along in the discussion. We're in the preparatory phase in anticipation of a filing of that application," said Thomas J. Butler, director of the SEC's new Office of Credit Ratings. In the aftermath of the global economic crisis, U.S. lawmakers in part blamed credit rating agencies for their role in the meltdown of the world's biggest economy. Parts of the Dodd-Frank Act were meant to increase scrutiny of the agencies, as well as spur competition, in an effort to strengthen the sector. Standard & Poor's, Moody's Investors Service and Fitch Ratings are the largest and best known ratings agencies designated as nationally recognized statistical rating organizations, or NRSRO. The SEC has taken no formal action on an application since denying an application in 2010 that China's Dagong Global Credit Rating Co., Ltd. had submitted in late 2009. Becoming a NRSRO carries more disclosure requirements, but also brings certain benefits, with NRSRO ratings woven into some investing regulations. There are currently nine NRSROs after the withdrawal of Rating and Investment Information Inc. in 2011. Butler also noted that markets could be changing the way they use credit ratings. "We're going through a redefinition, where there's some concern that there may have become too much reliance on the ratings as such," he said. "Credit ratings and credit rating agencies have become an integral component within the financial services sector," Butler added. "The question is how much should you rely on those and how much of your own due diligence do you need to do or should you do to augment whatever the credit rating agency puts out." The SEC's Office of Credit Ratings was created by the Dodd-Frank Act. Butler assumed his duties in mid-June. Link this Share this Digg this Email Reprints

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