Staff Report

FEBRUARY | 2024

NATIONALLY RECOGNIZED 

STATISTICAL RATING ORGANIZATIONS

ON

Office of Credit Ratings

U.S. Securities and Exchange Commission

As Required by Section 6 of the Credit Rating Agency Reform Act of 2006 

and Section 15E(p)(3)(C) of the Securities Exchange Act of 1934
02 | OFFICE OF CREDIT RATINGS

This is a report of the Staff of the U.S. Securities and Exchange Commission. Staff reports, Investor Bulletins, and 

other staff documents represent the views of Commission staff and are not a rule, regulation, or statement of the 

Commission. The Commission has neither approved nor disapproved the content of these documents and, like all 

staff statements, they have no legal force or effect, do not alter or amend applicable law, and create no new or 

additional obligations for any person. The Commission has expressed no view regarding the analysis, findings, or 

conclusions contained herein.
STAFF REPORT | i

CONTENTS

CHARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

I. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

II. STATUS OF REGISTRANTS AND APPLICANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III. EXAMINATIONS AND MONITORING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

B. Risk Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

C. Monitoring. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

D. 2023 Section 15E(p)(3) Examinations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1. Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2. Terms Used in This Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3. Summary of Essential Findings and Responses to Material Regulatory Deficiencies . . . 11

4. Responses to Recommendations from the 2022 Section 15E Examinations . . . . . . . . 19

IV. STATE OF COMPETITION, TRANSPARENCY, AND CONFLICTS OF INTEREST . . . . . . . . . . 21

A. Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

1. Select NRSRO Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

2. Market Share Observations in the Asset-Backed Securities Rating Category. . . . . . . . .31

3. Barriers to Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

B. Transparency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

C. Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

V. ACTIVITIES RELATING TO NRSROs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

A. Commission Orders and Releases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

C. Staff Publication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

VI. APPENDIX: SUMMARY OF STATUTORY FRAMEWORK AND RULES. . . . . . . . . . . . . . . . 47
ii | OFFICE OF CREDIT RATINGS

CHARTS

Chart 1. Table of NRSROs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Chart 2. Number of Outstanding Credit Ratings as of December 31, 2022 by 

Rating Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Chart 3. Percentage by Rating Category of Each NRSRO’s Outstanding Credit 

Ratings of the Total Outstanding Credit Ratings of all NRSROs as of 

December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Chart 4. Breakdown of Ratings Reported Outstanding by Rating Category as of 

December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Chart 5. Breakdown of Ratings Reported Outstanding by NRSRO 

as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Chart 6. Breakdown of Non-Government Securities Ratings Reported 

Outstanding by NRSRO as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . 25

Chart 7. Breakdown of Government Securities Ratings Reported 

Outstanding on December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Chart 8. Total Non-Government Ratings Issued by All NRSROs (2018-2022) . . . . . . . . . . . . . 27

Chart 9. Total Non-Government Ratings Issued by Medium and Small NRSROs 

(2018-2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Chart 10. Total ABS Ratings Issued by All NRSROs (2018-2022) . . . . . . . . . . . . . . . . . . . . . 28

Chart 11. NRSRO Credit Analysts and Credit Analyst Supervisors . . . . . . . . . . . . . . . . . . . . 29

Chart 12. NRSRO Fiscal Year Revenue as a Percentage of Aggregate 

Reported Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Chart 13. Rating Agency Market Shares for Total Non-Agency U.S. CMBS 

Issued in 2021, 2022, and First Half of 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Chart 14. Rating Agency Market Shares for U.S. Conduit CMBS Issued in 2021, 

2022, and First Half of 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Chart 15. Rating Agency Market Shares for U.S. Single-Borrower CMBS 

Issued in 2021, 2022, and First Half of 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Chart 16. Rating Agency Market Shares for Agency CMBS Issued in 2021, 2022, and 

First Half of 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Chart 17. Rating Agency Market Shares for U.S. ABS Issued in 2021, 2022, and 

First Half of 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Chart 18. Rating Agency Market Shares for U.S. MBS Issued in 2021, 2022, and 

First Half of 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Chart 19. Rating Agency Market Shares for U.S. CLOs Issued in 2021, 2022, and 

First Half of 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
STAFF REPORT | 1

I. INTRODUCTION

1 Pub. L. No. 109-291, 120 Stat. 1327 (Sept. 29, 2006). 

2 Unless otherwise noted, all section and rule references in this report are to the Exchange Act and rules under the Exchange 

Act.

3 See “Reports and Studies” section of the OCR webpage, available at https://www.sec.gov/about/divisions-office/officecredit-ratings/reports-and-studies. Prior to 2021, OCR published two separate annual reports: an Annual Report to 

Congress pursuant to Section 6 of the Rating Agency Act and a Summary Examination Report pursuant to Section 15E(p)

(3)(C) of the Exchange Act. In 2021, OCR began publishing a single annual report to present the requirements under both 

Section 6 of the Rating Agency Act and Section 15E(p)(3) of the Exchange Act. 

T

he Staff of the U.S. Securities and Exchange 

Commission (Commission) provides this 

Report regarding nationally recognized statistical rating organizations (NRSROs) pursuant 

to Section 6 of the Credit Rating Agency Reform 

Act of 2006 (Rating Agency Act)1 and Section 

15E(p)(3)(C) of the Securities Exchange Act of 

1934 (Exchange Act).2

Section 6 of the Rating Agency Act requires the 

Commission to submit an annual report to the 

Committee on Banking, Housing, and Urban 

Affairs of the U.S. Senate and the Committee on 

Financial Services of the U.S. House of Representatives that, with respect to the year to which the 

report relates:

■ Identifies applicants for registration as NRSROs 

under Section 15E;

■ Specifies the number of, and actions taken on, 

such applications; and

■ Specifies the views of the Commission on the 

state of competition, transparency, and conflicts 

of interest among NRSROs. 

Section 15E(p)(3)(C) requires the Commission 

to make available to the public an annual report 

summarizing: 

■ Essential findings of all Section 15E 

examinations, as deemed appropriate by the 

Commission;

■ NRSROs’ responses to any material regulatory 

deficiencies identified by the Commission; and

■ Whether the NRSROs have appropriately 

addressed the recommendations of the 

Commission contained in previous annual 

reports. 

This Report addresses the items specified in Section 

6 of the Rating Agency Act and Section 15E(p)(3). 

This is a report of the Staff and, as such, reflects 

solely the Staff’s views. 

Information regarding the topics covered in this 

Report with respect to prior periods can be found 

on the Office of Credit Ratings (OCR) page of the 

Commission’s website.3
2 | OFFICE OF CREDIT RATINGS
STAFF REPORT | 3

II. STATUS OF REGISTRANTS AND 

APPLICANTS

4 “Asset-backed securities” has the meaning set forth in 17 CFR 229.1101(c), as in effect on September 29, 2006 (the date of 

enactment of the Rating Agency Act).

5 Section 3(a)(62)(A).

6 Section 15E(a) sets out registration procedures for a credit rating agency to voluntarily apply to be registered with the 

Commission as an NRSRO.

7 See each NRSRO’s current Form NRSRO for any updates to this information. Each NRSRO must file with the 

Commission on EDGAR a Form NRSRO for annual certification and registration updates pursuant to paragraphs (e) 

and (f) of Rule 17g-1, and each NRSRO must make its current Form NRSRO publicly and freely available on its website 

pursuant to paragraph (i) of Rule 17g-1. Form NRSRO filings are available on the EDGAR system at https://www.sec.

gov/edgar/searchedgar/companysearch.html. Links to each NRSRO’s website can be found under the “Current NRSROs” 

section of the OCR webpage, available at https://www.sec.gov/ocr/ocr-current-nrsros.html.

8 Collectively, the three large NRSROs account for approximately 91.1% of the aggregate revenue reported by all NRSROs 

for the 2022 fiscal year in accordance with Rule 17g-3(a)(3); the three medium NRSROs collectively account for 

approximately 7.3% of such aggregate revenue; and the four small NRSROs collectively account for approximately 1.6% 

of such aggregate revenue. See infra Section IV.A.1.c, Chart 12. 

I

n 2007, the Commission began granting registrations to credit rating agencies that applied to be 

registered as an NRSRO. Section 3(a)(62) defines 

a “nationally recognized statistical rating organization” as a credit rating agency that is registered 

under Section 15E and issues credit ratings certified 

by qualified institutional buyers, in accordance with 

Section 15E(a)(1)(B)(ix), with respect to:

(i) Financial institutions, brokers, or dealers;

(ii) Insurance companies;

(iii) Corporate issuers;

(iv) Issuers of asset-backed securities;4

(v) Issuers of government securities, municipal 

securities, or securities issued by a foreign 

government; or

(vi) A combination of one or more categories of 

obligors described in any of clauses (i) through 

(v) above.5

As of December 31, 2023, there were ten credit 

rating agencies registered as NRSROs.6 Chart 

1 below lists each NRSRO registered with the 

Commission as of such date, the categories of 

credit ratings described in clauses (i) through (v) 

of Section 3(a)(62)(A) in which each NRSRO is 

registered, and the location of each NRSRO’s 

principal office.7

Solely for purposes of this Report: Fitch, Moody’s, 

and S&P are categorized as “large NRSROs;” 

AMB, DBRS, and KBRA are categorized as 

“medium NRSROs;” and Demotech, EJR, HR, 

and JCR are categorized as “small NRSROs.” 

These categorizations are based on revenue.8

In accordance with the Exchange Act, the 

Commission grants registration as an NRSRO 

if it finds the requirements of Section 15E are 
4 | OFFICE OF CREDIT RATINGS

satisfied and so long as it does not find: (1) that 

the applicant does not have adequate financial and 

managerial resources to produce credit ratings with 

integrity, to materially comply with its procedures 

and methodologies for determining credit ratings 

disclosed on Form NRSRO, and to materially 

comply with provisions of Section 15E related 

to the prevention of the misuse of non-public 

information, management of conflicts of interest, 

prohibited conduct, and designation of a 

compliance officer; or (2) that, if the applicant were 

to be registered, its registration would be subject to 

suspension or revocation.9

9 Section 15E(a)(2)(C).

10 See Section 15E(a) and Rule 17g-1; see also Form NRSRO, available at https://www.sec.gov/about/forms/formnrsro.pdf. 

In addition, Section 15E(b) requires NRSROs to promptly amend Form NRSRO if any information or document provided 

therein becomes materially inaccurate.

11 Section 3(a)(60) defines the term “credit rating,” Section 3(a)(61) defines the term “credit rating agency,” and Section 

3(a)(62) defines the term “nationally recognized statistical rating organization.” For additional information about credit 

ratings, see Updated Investor Bulletin: The ABCs of Credit Ratings (Oct. 12, 2017), available at https://www.sec.gov/oiea/

investor-alerts-and-bulletins/ib_creditratings.

12 See Section 3(a)(62)(A)(i) – (vi).

Applications for initial registration by a credit 

rating agency and for registration by a current 

NRSRO in additional rating categories are filed 

on Form NRSRO.10 A credit rating agency may 

choose not to apply for registration as an NRSRO, 

in which case it may issue credit ratings as a 

credit rating agency, but it may not issue credit 

ratings as an NRSRO.11 In addition, a credit rating 

agency may choose to apply for registration as 

an NRSRO in one or more rating categories.12 As 

noted in Chart 1 above, certain NRSROs are registered in all of the rating categories, and certain 

NRSROs are registered in fewer than all of the 

rating categories.

Chart 1. Table of NRSROs

NRSRO

Categories of Credit 

Ratings Principal Office

A.M. Best Rating Services, Inc. (AMB) (ii), (iii), and (iv) U.S.

DBRS, Inc. (DBRS) (i) through (v) U.S.

Demotech, Inc. (Demotech) (ii) U.S.

Egan-Jones Ratings Company (EJR) (i) through (iii) U.S.

Fitch Ratings, Inc. (Fitch) (i) through (v) U.S.

HR Ratings de México, S.A. de C.V. (HR) (i), (iii), and (v) Mexico

Japan Credit Rating Agency, Ltd. (JCR) (i), (ii), (iii), and (v) Japan

Kroll Bond Rating Agency, LLC (KBRA) (i) through (v) U.S.

Moody’s Investors Service, Inc. (Moody’s) (i) through (v) U.S.

S&P Global Ratings (S&P) (i) through (v) U.S.
STAFF REPORT | 5

In calendar year 2023, no applications for initial 

registration as an NRSRO, or applications for 

registration by a current NRSRO in additional 

rating categories, were filed with the Commission.

The SEC oversees and, as discussed below, 

examines NRSROs. The Commission is prohibited 

13 See Section 15E(c)(2).

by statute, however, from regulating the substance 

of credit ratings or the procedures and methodologies the NRSROs use to determine credit 

ratings.13 Methodologies include, among other 

things, the quantitative and qualitative models used 

to determine credit ratings.

STAFF REPORT | 7

III. EXAMINATIONS AND MONITORING

14 Pursuant to Section 17, the Staff can conduct examinations of NRSROs that supplement the Section 15E examinations.

A. OVERVIEW

I

n accordance with Section 15E(p)(3), the Staff 

conducts examinations of each NRSRO at least 

annually. 14 Generally, the purpose of these 

annual examinations is to promote compliance 

with applicable federal securities laws and rules by 

identifying potential instances of non-compliance by 

NRSROs with their statutory and regulatory obligations and recommending remedial action. Information obtained during an examination can also 

inform Staff of noteworthy industry developments.

To facilitate and promote compliance by NRSROs 

with their statutory and regulatory obligations, the 

Staff sends each NRSRO an examination summary 

letter that discusses its findings related to that 

NRSRO and recommends remedial measures. When 

appropriate, Staff may refer findings to the Commission’s Division of Enforcement for investigation.

Section 15E(p)(3)(B) provides that each NRSRO 

examination (Section 15E examinations) shall 

include a review of the following eight topic areas 

(Section 15E Review Areas):

■ Whether the NRSRO conducts business in 

accordance with its policies, procedures, and 

rating methodologies;

■ Management of conflicts of interest by the 

NRSRO;

■ Implementation of ethics policies by the 

NRSRO;

■ Internal supervisory controls of the NRSRO;

■ Governance of the NRSRO;

■ Activities of the Designated Compliance Officer 

(DCO) of the NRSRO;

■ Processing of complaints by the NRSRO; and

■ Policies of the NRSRO governing the 

post-employment activities of its former staff.

This Section III discusses the annual examinations 

pursuant to Section 15E(p)(3) that commenced in 

late 2022 and concluded in late September 2023 

(2023 Section 15E examinations).

B. RISK ASSESSMENT

The 2023 Section 15E examinations encompassed all of the statutorily required Section 15E 

Review Areas. The Staff also determined areas of 

emphasis and issues of focus for each examination 

based upon an NRSRO-specific risk assessment 

performed by the Staff, while also considering how 

to limit the amount of personal data collected in 

the examination process. The NRSRO-specific 

risk assessments considered a number of factors, 

including, but not limited to: 

■ NRSROs’ rating activities and operations;

■ Staff’s findings, recommendations, and other 

observations from prior examinations;
8 | OFFICE OF CREDIT RATINGS

■ Impact of a potential or actual internal control 

or compliance failure by the NRSRO;

■ Recent industry developments affecting 

NRSROs and the asset classes in which the 

NRSRO is registered;

■ NRSROs’ filings with the Commission and 

public disclosures;

■ NRSROs’ self-identified weaknesses;

■ Relevant Tips, Complaints, and Referrals 

(TCRs) received by the Commission; and

■ Risks identified in a risk assessment process.

Through its risk assessment process in connection 

with the 2023 Section 15E examinations, the Staff 

identified a number of potential risks for consideration in the NRSRO-specific risk assessments and 

incorporation into the examinations, as appropriate. The risks identified include:

■ Effect of Higher Interest Rates: The Staff 

observed that the sustained rise in interest rates 

in 2022 had increased debt service payments 

of highly leveraged companies, putting them 

under increased financial pressure. Given the 

potential impact on the creditworthiness of 

such companies, the Staff identified NRSRO 

surveillance of low-rated companies as an 

area for examination. NRSRO surveillance 

of collateralized loan obligations and 

securitizations backed by consumer assets and 

auto loans were also identified as potential 

areas for examination, given the Staff’s view 

that higher interest rates could impact the credit 

quality of such issuances.

■ Rental Income Securitizations: Large institutions 

have sharply increased their investments in 

single-family rental properties in certain regions 

and have securitized rental income from those 

15 See Report from the Committee on Appropriations on the Financial Services and General Government Appropriations Bill, 

2023, 117th Congress (June 28, 2022), available at https://www.congress.gov/117/crpt/hrpt393/CRPT-117hrpt393.pdf. 

properties as a source of funding. The House 

Committee on Appropriations commented 

on transparency and rating requirements and 

procedures in the rental income securitization 

market that might contribute to financial 

or housing price instability.15 Given these 

comments, the Staff identified ratings of such 

securitizations as an area for examination.

■ Distinguishing Analytical Tools from Models:

NRSROs must establish policies and procedures 

regarding the development of and approval by 

its board of directors, or a body performing a 

function similar to that of a board of directors, 

of the quantitative models used to determine 

credit ratings. In addition to models, some 

NRSROs may also use analytical tools to 

perform quantitative calculations that they do 

not consider to be models. The Staff identified 

as areas for examination the process by which 

an NRSRO distinguishes between analytical 

tools and models, how NRSROs utilize 

analytical tools, and how approval processes 

may differ for analytical tools and models.

C. MONITORING

To help inform its risk assessment process and 

examination program, the Staff in 2023 monitored 

credit rating activity, industry trends and developments, NRSRO operational developments and 

plans, and relevant capital market, economic, and 

financial news and events. The Staff’s monitoring 

activities include communications with NRSROs 

and reviewing sources such as NRSRO publications, news reports, trade publications, academic 

papers, industry conference information, and 

government reports.
STAFF REPORT | 9

For example, the Staff gathered information on the 

potential credit impacts of the unsettled commercial 

real estate market. NRSROs reported that they are 

actively monitoring the potential credit impacts of 

higher interest rates and soft commercial real estate 

demand across their rated portfolios, including 

with regard to CMBS and REITs. NRSROs also 

published research and commentaries regarding 

commercial real estate, examples of which are 

discussed in Section IV.B of this Report.

The Staff also continued to monitor NRSRO rating 

activity related to crypto assets, including so-called 

decentralized finance (DeFi), distributed ledger 

technologies, and smart contracts. Although rating 

activity in this area remains limited, one example 

is S&P’s and Moody’s ratings of Coinbase Global 

Inc., a crypto-asset trading platform.16 Another 

example is Moody’s credit ratings of blockchainbacked bonds issued by the European Investment 

Bank (EIB); Moody’s view is that the ultimate credit 

risk remains with EIB because they are obligated 

to make payments on the bonds independent 

of any risk introduced by the new technology 

features.17 Additionally, both S&P and Moody’s 

16 S&P’s and Moody’s current ratings of Coinbase may be found, respectively, at the following links: https://disclosure.

spglobal.com/ratings/en/regulatory/org-details/sectorCode/FI/entityId/690877 and https://www.moodys.com/credit-ratings/

Coinbase-Global-Inc-credit-rating-867853012/summary.

17 See Moody’s rates EIB’s first-ever green digital bond Aaa, Moody’s (Jul 3, 2023) available at https://www.moodys.com/

research/Moodys-rates-EIBs-first-ever-green-digital-bond-Aaa-Rating-Action--PR_477956; see also Moody’s assigns Aaa 

rating to EIB’s third digital bond, Moody’s (Feb 28, 2023) available at https://www.moodys.com/research/Moodys-assignsAaa-rating-to-EIBs-third-digital-bond-Rating-Action--PR_473857; see also Moody’s assigns Aaa rating to EIB’s second 

digital bond, Moody’s (Nov 29, 2022) available at https://www.moodys.com/research/Moodys-assigns-Aaa-rating-to-EIBssecond-digital-bond-Rating-Action--PR_471665.

18 S&P’s and Moody’s current ratings of MicroStrategy Inc. may be found, respectively, at the following links: https://

disclosure.spglobal.com/ratings/en/regulatory/org-details/sectorCode/CORP/entityId/683025 and https://www.moodys.

com/credit-ratings/MicroStrategy-Incorporated-credit-rating-823373715/summary.

19 See IOSCO, Supervisory Colleges for Credit Rating Agencies, Final Report (July 2013), available at https://www.iosco.org/

library/pubdocs/pdf/IOSCOPD416.pdf. The SEC serves as chair of the college for S&P and the Staff represents the SEC 

in this regard. The European Securities and Markets Authority serves as chair of the college for Fitch, and the Financial 

Conduct Authority serves as chair of the college for Moody’s.

20 For example, the Staff may review information relating to TCRs in a current examination, even if the referenced activities 

occurred outside of the Review Period.

rate MicroStrategy Inc., a software company with 

significant Bitcoin holdings.18

In 2023, the Staff also continued to participate in 

meetings that involved rating agency regulators 

globally, including those of the supervisory colleges 

that were formed for the largest internationally 

active credit rating agencies. The supervisory 

colleges were formed to enhance communication 

among credit rating agency regulators globally with 

respect to examinations of the relevant credit rating 

agencies.19 Each college engaged in periodic discussions during 2023 regarding supervisory activities 

related to the credit rating agencies. The Staff also 

conducted additional discussions with foreign 

regulators, as appropriate.

D. 2023 SECTION 15E(p)(3) 

EXAMINATIONS

1. Overview

The 2023 Section 15E examinations generally 

focused on the NRSROs’ activities for the period 

covering January 1, 2022, through December 31, 

2022 (the Review Period). The examinations also 

reviewed certain activities or credit rating actions 

from outside the Review Period, as appropriate.20
10 | OFFICE OF CREDIT RATINGS

The 2023 Section 15E examinations included a 

review of the Section 15E Review Areas and examination of each NRSRO’s compliance with Section 

15E and Rules 17g-1 through 17g-10. For example, 

the Staff reviewed a sample of rating actions of 

each NRSRO in certain asset classes for which it 

is registered and for certain issuers and obligors 

to determine whether the NRSRO operated in 

accordance with its policies, procedures, and rating 

methodologies. The Staff also reviewed rating 

files and documentation to evaluate whether each 

NRSRO adhered to recordkeeping requirements.21

2. Terms Used in This Report

This Report contains a summary of, respectively, 

the essential findings of the Staff’s annual examinations, the NRSROs’ responses to any material 

regulatory deficiencies, and whether the NRSROs 

have appropriately addressed the recommendations 

contained in previous reports.22

For purposes of this Report, the Staff considers an 

“essential finding” to be any instance identified 

by the Staff of apparent non-compliance by an 

NRSRO with the federal securities laws or related 

Commission rules applicable to NRSROs, except 

those instances attributable to a non-recurring 

and non-significant clerical or ministerial error or 

omission. The essential findings described in this 

Report reflect the Staff’s conclusions following 

examination of the NRSROs. The essential findings 

are not findings or conclusions of the Commission 

and have not been subject to adjudication.

21 To select rating actions and rating files to review, the Staff used a risk-based sampling process that is consistent with its 

overall risk assessment approach described in this Report. The Staff also considered factors including, but not limited 

to, the size of the rated asset class in the financial markets and the NRSRO’s business, the NRSRO’s activity in the 

rated asset class, the likelihood of impact on investors if a rating was not determined in accordance with the NRSRO’s 

methodologies and procedures, news reports and developments concerning the NRSROs or particular asset classes, TCRs, 

and information the Staff learned during examinations.

22 See Section 15E(p)(3)(C)(i)-(iii). In this Report, essential findings are organized by NRSRO within the applicable large, 

medium, and small groups.

For purposes of this Report, the Staff considers 

“material regulatory deficiencies” to be essential 

findings that involve:

■ Conduct or a deficiency that could undermine 

the quality of a credit rating or impair the 

objectivity of an NRSRO’s credit rating process; 

or

■ Conduct that may be inconsistent with the antifraud provisions of the federal securities laws.

The Staff’s determination that an NRSRO appropriately addressed a recommendation does not 

constitute its endorsement of that NRSRO or its 

policies, procedures, internal controls, or operations. In a future examination, the Staff may 

reevaluate the NRSRO’s response to recommendations that it previously deemed to be appropriately 

addressed by, for example, assessing whether the 

NRSRO fully implemented remedial measures 

and whether those remedial measures appear 

to be effective. The Staff may also review and 

make recommendations concerning the NRSRO’s 

policies, procedures, internal controls, or operations related to the general subject matter of a 

recommendation that it previously deemed to be 

appropriately addressed.

The Staff’s assessment of whether an NRSRO has 

appropriately addressed a recommendation depends 

on the specific facts and circumstances, including, 

but not limited to, the promptness of the NRSRO’s 

response, the severity of the conduct at issue, and 

whether the remedial action undertaken by the 
STAFF REPORT | 11

NRSRO is expected to fully resolve the Staff’s 

concerns. In addition, the determination of whether 

an NRSRO appropriately addressed a recommendation reflects solely the Staff’s view and does not 

necessarily reflect the views of the Commission.

3. Summary of Essential Findings and 

Responses to Material Regulatory 

Deficiencies

For purposes of the Report, the Staff grouped 

the essential findings by each large NRSRO, 

medium NRSRO, and small NRSRO in a random 

ordering.23

a. Large NRSRO #1

(1) The NRSRO’s policies and procedures 

did not require reviews in connection with 

the departure of employees holding certain 

positions, notwithstanding that individuals 

in such positions are eligible to participate in 

rating committees. The Staff recommended that 

the NRSRO revise or supplement its policies 

and procedures related to post-employment 

review requirements to ensure that such 

reviews are conducted for all applicable former 

employees who participated in determining 

credit ratings, as required by Section 15E(h)

(4)(A). The Staff also recommended that the 

NRSRO identify post-employment reviews that 

should have been conducted but were not and 

conduct those reviews. 

(2) The Staff reviewed the underlying information with respect to certain rating transitions 

disclosed on Exhibit 1 to Form NRSRO and 

observed a number of instances where, contrary 

to the instructions to the form, multiple ratings 

for a single entity were included in the under23 The annual examination of one of the small NRSROs did not identify any essential findings.

lying information. The Staff recommended 

that the NRSRO modify its approach for 

determining which credit ratings to include in its 

performance measurement statistics in accordance with the instructions to Form NRSRO.

b. Large NRSRO #2

(1) The NRSRO did not publish an information disclosure form for rating actions with 

respect to a certain type of private credit rating. 

The Staff recommended that the NRSRO 

provide information disclosure forms for such 

rating actions to the same persons who can 

receive or access ratings of this type in accordance with the requirements of Rule 17g-7(a). 

The Staff also recommended that the NRSRO 

revise its policies and procedures to reflect the 

requirement to publish information disclosure 

forms with respect to such ratings.

c. Large NRSRO #3

(1) The NRSRO did not appear to require 

a sufficient record to be made and retained 

with respect to certain determinations made 

during surveillance reviews. The Staff reviewed 

documentation related to a surveillance review 

but, due to the lack of a documented rationale, 

was not able to determine whether the decision 

that the rating was at an appropriate rating 

level was made in accordance with the applicable methodology. The Staff recommended 

that the NRSRO improve its internal control 

structure required by Section 15E(c)(3)(A), 

including by making and retaining appropriate 

documentation of qualitative considerations, to 

allow for after-the-fact verification that surveillance decisions were consistent with the applicable methodologies.
12 | OFFICE OF CREDIT RATINGS

(2) With regard to two ratings, a member 

of an analytical team who chaired the rating 

committees exerted pressure on other analytical 

team members and rating committee participants to assign higher ratings. Records of 

statements made by this individual reflect a 

focus on gaining business and, with respect 

to one of the issuers, a desire to make accommodations to please the issuer. Contrary to 

the NRSRO’s policies and procedures, this 

individual participated in sales and marketing 

activities and appears to have been influenced 

by sales and marketing considerations. The 

individual also participated in the determination of the credit ratings by acting as chair 

of the rating committees, and, as such, the 

NRSRO appeared to issue and maintain credit 

ratings notwithstanding the existence of a 

prohibited conflict of interest. The Staff recommended that, consistent with the requirements 

of Section 15E(h) and Rule 17g-5(c)(8), the 

NRSRO enhance enforcement of its policies 

and procedures to prevent persons within 

the NRSRO who participate in determining 

credit ratings from also participating in sales 

or marketing or being influenced by sales or 

marketing considerations.

The Staff identified this essential finding as a 

material regulatory deficiency.

In its response, the NRSRO noted that it 

conducted an internal investigation of the 

matter after an employee had anonymously 

reported the actions of the individual in 

question by means of the NRSRO’s dedicated 

reporting hotline. The NRSRO also noted 

that, following its investigation, it took 

remedial action by terminating the individual’s 

employment and that it subsequently selfreported the matter to the Staff. In addition, 

based on its internal investigation and an 

internal independent credit review, the NRSRO 

concluded that each of the two credit ratings 

was at an appropriate rating level in accordance 

with the applicable methodologies and had 

not been affected by the individual’s conduct. 

Although the NRSRO stated that it believes its 

applicable procedures and controls are robust 

and functioning well, the NRSRO indicated 

that it is reviewing its policies, procedures, and 

controls to consider if any enhancements are 

warranted to help prevent such conduct from 

occurring in the future.

(3) In some instances, analysts inadvertently 

sent emails with confidential pending rating 

action information to persons outside the 

NRSRO. Contrary to the NRSRO’s policies 

and procedures, in most of the instances, the 

NRSRO’s compliance department was not 

promptly notified of the inappropriate dissemination of material non-public information. The 

Staff recommended that the NRSRO enforce its 

policies and procedures to prevent the misuse 

of material, nonpublic information, as required 

by Section 15E(g)(1), and consider whether 

additional controls are needed. The Staff also 

recommended that the NRSRO take measures 

to ensure that NRSRO personnel understand 

their obligation to promptly report to the 

NRSRO’s compliance department instances 

where non-public information has been 

inappropriately disclosed.

(4) In assigning certain credit ratings, the 

NRSRO used a model that contained both 

prepopulated data fields and data fields that 

required the analyst to enter appropriate values. 

The NRSRO assigned certain ratings that were 

higher than they should have been because a 

prepopulated value in a model was incorrect 

for the issuer and the analyst did not recognize 

or correct the error prior to determining 
STAFF REPORT | 13

the rating. The Staff recommended that the 

NRSRO enhance its internal control structure 

required by Section 15E(c)(3)(A) as it pertains to 

adherence to its methodologies and the calculation of certain metrics.

(5) The NRSRO did not disclose complete 

and correct credit rating histories in its Rule 

17g-7(b) disclosures. For a particular month, 

the NRSRO posted a disclosure that did not 

include a significant number of withdrawn 

credit ratings that were required to be disclosed. 

For a different month, the subclass designation 

of a significant number of ratings was misclassified, and the file contained duplications of 

some rating information. Further, the NRSRO 

did not include a particular rating in the 

NRSRO’s credit rating history disclosures for 

approximately 18 months. The Staff recommended that the NRSRO implement appropriate procedures or controls to ensure the 

accurate creation and maintenance of its credit 

rating history disclosures.

d. Medium NRSRO #1

(1) In several instances, the NRSRO provided 

inaccurate or incomplete records in response to 

requests from the Staff. The Staff recommended 

that the NRSRO implement appropriate 

controls to ensure that it maintains accurate 

records and promptly provides complete copies 

of all relevant documents in its productions to 

the Staff, as required by Rule 17g-2(f).

(2) Some information disclosure forms 

contained a link purporting to provide the 

historical performance disclosure required by 

Rule 17g-7(a). However, clicking on the link 

did not retrieve the required information. The 

Staff recommended that the NRSRO ensure 

that its information disclosure forms contain the 

required information for all rating actions.

e. Medium NRSRO #2

(1) The NRSRO did not appear to require 

a sufficient record to be made and retained 

with respect to certain qualitative adjustments 

made by analysts in the course of conducting 

surveillance reviews. The Staff reviewed 

documentation related to a surveillance 

review but, due to the lack of a documented 

rationale, was not able to determine whether 

certain adjustments were made in accordance 

with the applicable methodology. The Staff 

recommended that the NRSRO improve its 

internal control structure required by Section 

15E(c)(3)(A), including by making and retaining 

appropriate documentation of qualitative 

considerations, to allow for after-the-fact 

verification that surveillance decisions were 

consistent with the applicable methodologies.

(2) Although a process for users of credit 

ratings to submit complaints anonymously 

exists at this NRSRO, it is not apparent 

or intuitive how to do so. The difficulty in 

submitting complaints anonymously may 

discourage users of credit ratings from communicating bona fide complaints to the NRSRO. 

The Staff recommended that the NRSRO 

establish effective procedures for the receipt, 

retention, and treatment of confidential, 

anonymous complaints by users of credit 

ratings, consistent with the requirements of 

Section 15E(j)(3).

(3) The Staff reviewed the underlying information with respect to certain rating transitions 

disclosed on Exhibit 1 to Form NRSRO and 

observed three errors inconsistent with the 

instructions to the form—the inclusion of a 

withdrawn rating, the inclusion of an indicative 

rating, and the inclusion of a debt rating when 

an obligor rating was available. The Staff 

recommended that the NRSRO ensure that the 
14 | OFFICE OF CREDIT RATINGS

performance measurement statistics disclosed 

in Exhibit 1 to Form NRSRO are accurate and 

consistent with the instructions to the form.

f. Medium NRSRO #3

(1) The NRSRO’s policy regarding securities 

holdings generally requires employees to 

report their holdings to the compliance 

department. Certain accounts, however, were 

excluded from this requirement. Since the 

exclusion was not limited to indirect ownership 

interests, the NRSRO’s policy did not appear 

to be reasonably designed, given the lack of 

monitoring of holdings that could result in a 

conflict of interest under Rule 17g-5(b)(6) or 

Rule 17g-5(c)(2). The Staff recommended that, 

consistent with the requirements of Section 

15E(h)(1), the NRSRO establish, maintain, 

and enforce written policies and procedures 

reasonably designed to address and manage 

conflicts of interest with respect to directly 

owned securities held in the excluded accounts 

and review past account statements for such 

accounts to identify any instances where a credit 

analyst participated in determining a credit 

rating or had responsibility for approving a 

rating while directly owning securities of the 

rated entity.

(2) The NRSRO did not enforce its policies 

and procedures regarding conflict of interest 

reviews following the departure of employees 

who participate in determining credit ratings 

and the submission of employment transition 

reports to the Commission with respect to 

former employees who obtain employment at 

an entity rated by the NRSRO. In one instance, 

the NRSRO did not conduct a conflict of 

interest review within 30 days of learning that 

a former employee had joined a rated entity, 

as required by its policies and procedures; and 

instead conducted the review eight months 

later. In another instance, although the NRSRO 

conducted the conflict of interest review in 

accordance with its policies and procedures, 

it did not submit an employment transition 

report to the Commission for over nine months. 

In addition, the NRSRO’s written procedures 

did not require monitoring of all departed 

employees for five years as necessary to comply 

with the employment transition reporting 

requirements of Section 15E(h)(5)(A). The Staff 

recommended that the NRSRO conduct conflict 

of interest reviews for departed employees in 

accordance with its policies and procedures 

and as required by Section 15E(h)(4)(A). The 

Staff also recommended that the NRSRO 

evaluate and revise its policies and procedures 

for submitting employment transition reports to 

the Commission to ensure compliance with the 

requirements of Section 15E(h)(5)(A).

f. Small NRSRO #1

(1) The NRSRO maintained a system to 

measure credit rating analyst productivity based 

on the number of rating actions an analyst 

was able to complete on a weekly basis. With 

respect to the initial determination of a credit 

rating, an analyst only received credit under the 

system if the credit rating was actually issued. In 

the Staff’s view, this system established incentives for analysts to produce ratings as quickly 

as possible, without regard to rating quality, 

and the presence of such incentives made it 

difficult or impossible for the NRSRO to 

manage conflicts of interest related to how the 

NRSRO is paid for credit ratings. Furthermore, 

the system appeared to be designed to achieve 

sales and marketing objectives and to result 

in analytical employees being influenced by 

sales and marketing considerations. The Staff 

recommended that the NRSRO eliminate 
STAFF REPORT | 15

performance measures for analysts that 

promote sales and marketing considerations 

and exacerbate conflicts of interest. The Staff 

also recommended that the NRSRO maintain 

adequate resources and utilize those resources to 

implement and enforce policies, procedures, and 

controls necessary to consistently produce credit 

ratings with integrity.

The Staff identified this essential finding as a 

material regulatory deficiency.

In its response, the NRSRO stated its belief 

that its conflict-related policies and procedures, 

training, and other controls provide a high 

measure of assurance regarding the NRSRO’s 

compliance with Rule 17g-5. The NRSRO 

noted a lack of adverse responses to an annual 

survey of analysts regarding the presence of 

conflicts of interest. Nonetheless, the NRSRO 

indicated that it eliminated the productivity 

measurement system upon receipt of the Staff’s 

finding and recommendation and that it plans 

to significantly augment the level of oversight 

of the firm’s compensation and promotion 

policies and practices by the NRSRO’s board 

of directors. The NRSRO also noted that it 

plans to perform a review of the adequacy of 

financial and managerial resources available to 

consistently produce ratings with integrity and 

will augment such resources as necessary and 

appropriate in accordance with the results of 

the review. 

(2) In one instance, a senior manager of the 

NRSRO prevented the designated compliance 

officer from enforcing a policy and procedure 

regarding permitted attendance at a joint 

meeting of analytical and marketing personnel 

with clients. The senior manager’s interference 

with the designated compliance officer’s 

enforcement of the policy appeared to inhibit 

the designated compliance officer’s ability to 

fulfill their Section 15E(j)(1) responsibility to 

administer conflicts of interest policies and 

procedures and ensure compliance with the 

securities laws. The Staff recommended that 

the NRSRO, as required by Section 15E(h)

(1), enforce its conflicts of interest policies 

and procedures and, to facilitate compliance, 

provide appropriate notice and training on 

those policies to NRSRO personnel and institute 

appropriate discipline with regard to personnel 

who do not follow such policies.

The Staff identified this essential finding as a 

material regulatory deficiency.

In its response, the NRSRO stated that it plans 

to conduct a training session on its procedure 

regarding joint analytical and commercial 

meetings and calls and remind its employees by 

e-mail of the importance of adhering to such 

procedure. The NRSRO also indicated that it 

will perform a review of its discipline procedures, with a view toward strengthening disciplinary measures taken in response to intentional 

noncompliance with compliance obligations.

(3) The NRSRO did not appear to adhere to 

the policies and procedures it adopted pursuant 

to Section 15E(j)(3) to establish procedures 

for the receipt, retention, and treatment of 

complaints regarding credit ratings, models, 

and methodologies. In one instance, an analyst 

notified management about errors related to 

the incorporation of new information into a 

model used in the rating process. Although 

the analyst’s emails appeared to constitute a 

complaint under the NRSRO’s definition of that 

term, the NRSRO did not follow its policies 

and procedures regarding the receipt, retention, 

and treatment of complaints. The Staff 

recommended that the NRSRO adhere to its 
16 | OFFICE OF CREDIT RATINGS

complaints policies and procedures and ensure 

that its employees understand what types of 

communications constitute a complaint under 

such policies and procedures.

(4) In 2022, the NRSRO did not conduct 

surveillance reviews for a significant number 

of ratings within the time frame required by 

its policies and procedures, demonstrating that 

the NRSRO’s internal controls surrounding 

adherence to its policies and procedures for 

determining credit ratings were not effective. 

The Staff recommended that the NRSRO 

implement effective controls promoting 

adherence to the surveillance review requirements set forth in its policies and procedures, as 

required by Section 15E(c)(3)(A).

(5) The NRSRO’s policy regarding securities 

holdings generally requires employees to report 

their holdings to the compliance department. 

Certain accounts, however, were excluded 

from this requirement. Since the exclusion was 

not limited to indirect ownership interests, the 

NRSRO’s policy did not appear to be reasonably 

designed, given the lack of monitoring of 

holdings that could result in a conflict of interest 

under Rule 17g-5(b)(6) or Rule 17g-5(c)(2). The 

Staff recommended that, consistent with the 

requirements of Section 15E(h)(1), the NRSRO 

establish, maintain, and enforce written policies 

and procedures reasonably designed to address 

and manage conflicts of interest with respect to 

directly owned securities held in the excluded 

accounts and review past account statements for 

such accounts to identify any instances where 

a credit analyst participated in determining a 

credit rating or had responsibility for approving 

a rating while directly owning securities of the 

rated entity.

i. Small NRSRO #2

(1) The Staff observed an instance where 

the NRSRO changed its rating analysis at 

the behest of a client in order to provide the 

client with a higher rating that was determined 

inconsistently with the NRSRO’s policies, 

procedures, and methodologies for determining 

credit ratings. The NRSRO’s internal control 

structure was ineffective in identifying inconsistencies between the client’s suggestion and the 

NRSRO’s methodology. Specifically, oversight 

by the rating committee appears to have been 

ineffective in this case. Based on a review 

of committee minutes and discussions with 

committee members, the Staff concluded that 

the committee did not appropriately scrutinize 

the change in analytical approach. Further, 

the circumstances under which the NRSRO 

changed its rating analysis demonstrate that 

analytical personnel were influenced by sales 

and marketing considerations, and, as such, the 

NRSRO issued and maintained the credit rating 

notwithstanding the existence of a prohibited 

conflict of interest. The Staff recommended 

that the NRSRO enhance its internal control 

structure required by Section 15E(c)(3)(A) and 

consider subjecting rating outcomes changed 

at a client’s request to enhanced scrutiny. The 

Staff also recommended that the NRSRO 

review and, if appropriate, revise, any credit 

ratings that were determined using a similar 

analytical approach and, more broadly, any 

credit ratings that were determined using an 

analytical approach recommended by a client. 

The Staff identified this essential finding as a 

material regulatory deficiency.

In its response, the NRSRO stated that it plans 

to modify the relevant methodology to clarify 

the NRSRO’s analytical approach in situations 
STAFF REPORT | 17

such as those underlying the Staff’s finding. 

The NRSRO also indicated that it will enhance 

controls regarding the evaluation of additional 

information provided by an entity after a 

rating has been determined. The enhanced 

controls identified by the NRSRO include 

requiring documentation related to the analysis 

of the information and memorializing related 

rating committee discussions. The NRSRO 

further stated that it will conduct a review 

of outstanding credit ratings in connection 

with the implementation of its contemplated 

methodology changes and that it will prepare a 

special report for discussion by its methodology 

development committee.

(2) The NRSRO did not appear to have 

effective internal controls to ensure that models 

were adequately evaluated and validated prior 

to use. With respect to one model, although a 

review was conducted and the model validated, 

such process did not discover apparent inconsistencies between the model and the governing 

methodology. The Staff recommended that, 

consistent with the requirements of Section 

15E(c)(3)(A), the NRSRO implement controls 

reasonably designed to ensure that newly 

developed or updated models are adequately 

evaluated and validated prior to being put 

in use. The Staff also recommended that the 

NRSRO conduct a review of and, where appropriate, revise credit ratings that were determined 

using financial metrics that were calculated in a 

manner inconsistent with the methodology.

The Staff identified this essential finding as a 

material regulatory deficiency.

In its response, the NRSRO expressed 

disagreement with the Staff’s conclusion that 

the model was inconsistent with the governing 

methodology and indicated that it plans to 

amend the methodology to provide clarity 

regarding its intended analytical approach. 

The NRSRO also indicated that it plans to 

document detailed minutes of board of directors 

discussions in connection with the approval of 

methodologies and models.

(3) The Staff observed an instance where the 

NRSRO did not retain a record of a model 

output that determined a model-implied rating 

used in the rating analysis. The Staff recommended that the NRSRO retain all internal 

records used to form the basis of a credit rating, 

as required by Rule 17g-2.

(4) The NRSRO made disclosures that 

implied it was registered as an NRSRO in 

certain asset classes in which it was not registered. In light of the Section 15E(f)(2) prohibition on a credit rating agency stating that it 

is an NRSRO when it is not registered as such, 

the Staff recommended that the NRSRO revise 

its existing disclosures and public filings, so 

they do not contain misleading information 

regarding the classes of credit ratings in which 

the NRSRO is registered.

(5) In certain instances, analysts used a 

messaging application to conduct analytical 

discussions pertaining to the determination of 

credit ratings. However, the NRSRO had limited 

access to message histories and, as a result, did 

not retain the communications for three years, as 

required by Rule 17g-2(c). Further, the NRSRO 

did not have policies and procedures governing 

the use of the messaging application, and the 

NRSRO’s procedures governing document 

retention did not address communications on 
18 | OFFICE OF CREDIT RATINGS

the messaging application. The Staff recommended that the NRSRO retain all external and 

internal communications relating to initiating, 

determining, maintaining, monitoring, changing, 

or withdrawing a credit rating, as required by 

Rule 17g-2(b)(7), and establish appropriate 

controls to monitor communications to ensure 

compliance with its policies and procedures and 

applicable rules and statutes.

(6) The NRSRO published an information 

disclosure form that did not include all the 

information required to be disclosed under Rule 

17g-7(a). Specifically, the NRSRO omitted 

from the form a disclosure regarding payment 

during the most recently ended fiscal year for 

non-credit rating services by a person that paid 

the NRSRO to determine a credit rating. The 

Staff recommended that, when applicable, the 

NRSRO state in the information disclosure 

form that it was also paid for services other than 

determining credit ratings by a person that paid 

it to determine the credit ratings.

(7) The Staff reviewed the underlying information with respect to certain rating transitions 

disclosed on Exhibit 1 to Form NRSRO and 

observed several instances where, contrary to 

the instructions to the form, multiple ratings for 

a single entity were included in Exhibit 1. The 

NRSRO indicated to Staff that it includes all 

credit ratings in its performance measurement 

statistics. The Staff recommended that the 

NRSRO modify its approach for determining 

the credit ratings to include in its performance 

measurement statistics in accordance with the 

instructions to Form NRSRO.

24 One of these findings also implicated material, non-public information and another implicated internal controls. Each such 

finding is double counted within the list as a result.

j. Small NRSRO #3

(1) The Staff identified instances where the 

NRSRO did not appear to store documents 

containing confidential information in a manner 

that would prevent unauthorized access, as 

required by the NRSRO’s policies and procedures. In addition, the NRSRO’s policies and 

procedures appeared to lack sufficient guidance 

regarding the handling of physical documents, 

creating the potential for inappropriate dissemination of material, non-public information and 

exposing analytical staff to sales and marketing 

considerations. The Staff recommended that 

the NRSRO establish, maintain, and enforce 

policies and procedures reasonably designed 

to safeguard physical documents to prevent 

the misuse of material non-public information 

and to prevent analytical staff from being 

influenced by sales or marketing considerations, 

as required by Section 15E(g)(1) and Section 

15E(h)(1), respectively.

Additionally, one of the NRSROs appeared to not 

comply with certain requirements in a Commission 

order. The Staff recommended that the NRSRO 

comply with these requirements.

In total, the Staff communicated 29 essential 

findings to the NRSROs at the conclusion of the 

2023 Section 15E examinations and identified five 

of these essential findings as material regulatory 

deficiencies. The essential findings can be grouped 

thematically as follows: 

■ nine related to issues addressing or managing 

conflicts of interest, implicating Sections 15E(h)

(1), (4) and (5), and Rule 17g-5;24 
STAFF REPORT | 19

■ eight related to disclosure or reporting issues, 

implicating Section 15E(f)(2), Rule 17g-7(a), 

Rule 17g-7(b), and Form NRSRO;

■ six related to internal control issues, implicating 

Section 15E(c)(3)(A);25

■ three related to the retention and/or production 

of records, implicating Rule 17g-2;

■ two related to issues regarding the prevention 

of misuse of material, non-public information, 

implicating Section 15E(g)(1);26

■ two related to procedures for the receipt, 

retention, and treatment of complaints, 

implicating Section 15E(j)(3); and

■ one related to compliance with a prior 

Commission order. 

4. Responses to Recommendations from 

the 2022 Section 15E Examinations

To assess whether NRSROs appropriately 

addressed recommendations from the 2022 

Section 15E examinations, the Staff reviewed each 

NRSRO’s written response describing its planned 

remedial measures, participated in calls with 

each NRSRO to discuss its written response, and 

requested additional documentation, as appropriate. The Staff also continued to assess remedial 

measures taken to address recommendations 

from prior Section 15E examinations that had not 

previously been determined to have been appropriately addressed.

During the 2023 Section 15E examinations, the 

Staff assessed each NRSRO’s progress in implementing remedial measures such as establishing 

new or enhancing existing policies or procedures 

or internal controls, or adding personnel and 

other resources in areas such as compliance, 

25 One of these findings also implicated conflicts of interest. This finding is double counted within the list as a result.

26 One of these findings also implicated conflicts of interest. This finding is double counted within the list as a result.

information technology, or analytics. The Staff 

takes into account that NRSROs may not be able 

to fully implement remedial measures and/or that 

the Staff may not be able to fully assess the effectiveness of these measures during the 2023 Section 

15E examinations. 

The Staff determined all recommendations from 

the 2022 Section 15E examinations and, to the 

extent they had not previously been determined 

to have been appropriately addressed, prior 

Section 15E examinations, have been appropriately addressed, except as noted below. NRSROs 

generally addressed the recommendations from the 

2022 Section 15E examinations by taking remedial 

measures such as adopting new or enhancing 

existing policies or procedures, internal controls, 

or systems and processes, and by adding personnel 

and other resources.

In one instance, the Staff determined that a small 

NRSRO had attempted certain remedial efforts, 

but that such efforts did not appropriately address 

the corresponding recommendation. In 2022, the 

Staff found that the small NRSRO did not appear 

to acquire and analyze all material analytical 

facts when determining a credit rating. The Staff 

recommended that the NRSRO enhance its 

internal controls governing the implementation 

of and adherence to its policies, procedures, and 

methodologies for determining credit ratings as 

they pertain to data quality control, transaction 

vetting, and acquisition of information about its 

issuers. The Staff determined that the NRSRO did 

not appropriately address the 2022 recommendation because the NRSRO’s remediation did not 

enhance its internal controls around data quality, 
20 | OFFICE OF CREDIT RATINGS

vetting new transactions, or acquiring information 

about its issuers in a way that would prevent 

future ratings from being issued despite a lack of 

consideration and understanding of all material 

analytical facts.

In another instance, the Staff determined that a 

small NRSRO had completed its remedial efforts, 

but that such efforts did not appropriately address 

the corresponding recommendation. In 2022, the 

Staff found that several information disclosure 

forms published by the small NRSRO did not 

appear to include disclosures required under Rule 

17g-7(a). The Staff recommended that the NRSRO 

ensure that its information disclosure forms contain 

all required disclosures. While the Staff observed 

in the 2023 examination that the NRSRO made 

efforts to address the previous recommendation, 

the Staff determined that the NRSRO did not 

appropriately address the 2022 recommendation 

because the Staff identified a continued failure to 

disclose one of the required items that was the 

subject of the 2022 finding.
STAFF REPORT | 21

IV. STATE OF COMPETITION, 

TRANSPARENCY, AND CONFLICTS 

OF INTEREST

27 As discussed in Section IV.A.2 of this Report, information available on the websites of Commercial Mortgage Alert and 

Asset-Backed Alert also shows that DBRS and KBRA have achieved significant market shares in specific asset-backed 

securities rating subcategories over the past few years. 

28 Annual certifications on Form NRSRO must be filed with the Commission on EDGAR pursuant to Rule 17g-1(f) and 

made publicly available without cost on each NRSRO’s website pursuant to Rule 17g-1(i). The number of outstanding 

credit ratings for each rating category for which an NRSRO is registered is reported on Item 7A of Form NRSRO.

A. COMPETITION

1. Select NRSRO Statistics

S

ections IV.A.1.a through 1.c below summarize 

and discuss certain information reported 

by NRSROs on Form NRSRO or pursuant 

to Rule 17g-3 that provides insight into the 

state of competition among NRSROs. While this 

information indicates that the large NRSROs 

continue to account for the highest percentages of 

outstanding ratings, it also shows that the small 

and medium NRSROs continue to compete with 

the large NRSROs in certain rating categories. For 

instance, the information shows that AMB has 

the greatest number of ratings outstanding in the 

insurance category and that DBRS and KBRA have 

maintained a meaningful ratings share in the assetbacked securities category.27

a. NRSRO Credit Ratings Outstanding

Each NRSRO annually reports not later than 

March 31st the number of credit ratings 

outstanding, as of the end of the preceding calendar 

year, in each rating category for which it is registered.28 This information, for the calendar year 

ending December 31, 2022, is summarized in 

Charts 2 through 10 below and can be useful in 

determining the breadth of an NRSRO’s coverage 

with respect to issuers, obligors, and securities or 

money market instruments within a particular 

rating category:

■ Chart 2 depicts the number of credit ratings each 

NRSRO had outstanding, as of December 31,

 2022, in each rating category for which it was 

registered. 

■ Chart 3 depicts the percentage of each NRSRO’s 

outstanding credit ratings of the total credit 

ratings outstanding in each category and overall.

■ Chart 4 illustrates the relative size of each rating 

category based on the aggregate number of 

ratings reported outstanding by all NRSROs. 

■ Chart 5 illustrates the percentage of ratings 

each NRSRO had outstanding across all rating 

categories. 
22 | OFFICE OF CREDIT RATINGS

■ Chart 6 illustrates the percentage of ratings 

each NRSRO had outstanding across all 

rating categories other than the government 

securities category.

■ Chart 7 depicts the percentage of ratings each 

NRSRO had outstanding in the government 

securities category.

■ Chart 8 depicts the change in the number of 

non-government ratings outstanding for each 

NRSRO over the prior five years.

■ Chart 9 depicts the change in the number of 

non-government ratings outstanding for each 

small and medium NRSRO over the prior five 

years.

■ Chart 10 depicts the change in the number of 

asset-backed securities ratings outstanding for 

each NRSRO over the prior five years.

While comparing the number of ratings outstanding

among NRSROs provides a cumulative view on 

the state of competition over time,29 comparing 

the number of ratings issued by such NRSROs 

in a given period provides a more current picture 

of competition among NRSROs. Consequently, 

the information described in Charts 8 through 10 

(which show changes in ratings outstanding over 

a five-year period) may provide an indication of 

how NRSROs have been competing in recent years. 

Additionally, the information described in Section 

IV.A.2 of this Report (relating to recent market 

share developments in the asset-backed securities 

29 The ratings counts disclosed on Item 7A of Form NRSRO include outstanding credit ratings, regardless of when they were 

issued. As such, they reflect the rating activity of NRSROs over a period of years.

30 For example, AMB has traditionally focused on rating insurance companies and their affiliates.

31 An NRSRO identifies its credit rating affiliates on Item 3 of Form NRSRO.

32 Effective January 1, 2015, Item 7A of Form NRSRO and the corresponding Instructions were amended to clarify the 

manner in which the number of outstanding credit ratings should be calculated and presented. The clarifying amendments 

were designed to help ensure that rating count disclosures are consistent across NRSROs. See Nationally Recognized 

Statistical Rating Organizations, Release No. 34-72936 (Aug. 27, 2014), 79 FR 55078, 55220-22 (Sept. 15, 2014) (2014 

Adopting Release), available at https://www.govinfo.gov/content/pkg/FR-2014-09-15/pdf/2014-20890.pdf (discussing the 

clarifying amendments with respect to Item 7 of Form NRSRO).

rating category), which provides information about 

ratings issued each year since 2021, may provide 

additional insight regarding the current competitive 

landscape among the NRSROs in the asset-backed 

securities rating category.

There are additional limitations to assessing the 

state of competition in each rating category and in 

the aggregate based on the number of outstanding 

ratings. For instance, some NRSROs have pursued 

business strategies to specialize in particular rating 

categories or sub-categories.30Also, the reported 

information does not reflect any credit ratings 

being issued by NRSROs in rating categories in 

which they are not registered with the Commission, 

nor does it reflect ratings issued by an affiliate of an 

NRSRO unless the affiliate is identified as a credit 

rating affiliate.31

Further, when reporting its outstanding ratings, 

each NRSRO makes its own determination of the 

applicable rating category into which each of its 

ratings falls. The classification of ratings into the 

five rating categories is not necessarily consistent 

across NRSROs.32

Chart 2 provides the number of outstanding 

credit ratings reported by each NRSRO in its 

annual certification for the calendar year ending 

December 31, 2022, in each of the five rating 

categories identified in Section 3(a)(62)(A) for 
STAFF REPORT | 23

Chart 2. Number of Outstanding Credit Ratings as of December 31, 2022, by Rating Category

NRSRO Financial 

Institutions

Insurance 

Companies

Corporate 

Issuers

AssetBacked 

Securities

Government 

Securities

Total 

Ratings

Year-Over-Year 

Change in Total 

Ratings 

(2021 to 2022)

AMB N/R 7,373 979 7 N/R 8,359 1.10%

DBRS 8,179 190 2,515 18,712 33,009 62,605 1.66%

Demotech N/R 439 N/R N/R N/R 439 N/A

EJR 6,020 626 8,673 N/R N/R 15,319 8.75%

Fitch 33,890 3,219 20,485 34,091 170,291 261,976 -2.50%

HR 810 N/R 597 N/R 452 1,859 3.16%

JCR 923 99 3,296 N/R 369 4,687 3.72%

KBRA 1,880 219 527 21,830 9,898 34,354 13.92%

Moody’s 35,643 2,702 32,554 51,826 548,837 671,562 -1.65%

S&P 56,773 6,924 55,009 37,338 908,740 1,064,784 -2.31%

Total 144,118 21,791 124,635 163,804 1,671,596 2,125,944 -1.69%

N/R indicates that the NRSRO was not registered in the applicable rating category as of the reporting date.

As Demotech was not registered as an NRSRO in 2021, year-over-year data is not available.

Percentages have been rounded to the nearest one-hundredth of one percent.

Sources: NRSRO annual certifications for the 2021 and 2022 calendar years, Item 7A on Form NRSRO.

Chart 3. Percentage by Rating Category of Each NRSRO’s Outstanding Credit Ratings of the Total 

Outstanding Credit Ratings of all NRSROs as of December 31, 2022

NRSRO Financial 

Institutions

Insurance 

Companies

Corporate 

Issuers

AssetBacked 

Securities

Government 

Securities

Total 

Ratings

Percentage Point 

Change in Total Ratings 

from 2021 to 2022

AMB N/R 33.84% 0.79% <0.01% N/R 0.39% 0.01%

DBRS 5.68% 0.87% 2.02% 11.42% 1.97% 2.94% 0.10%

Demotech N/R 2.01% N/R N/R N/R 0.02% N/A

EJR 4.18% 2.87% 6.96% N/R N/R 0.72% 0.07%

Fitch 23.52% 14.77% 16.44% 20.81% 10.19% 12.33% -0.10%

HR 0.56% N/R 0.48% N/R 0.03% 0.09% <0.01%

JCR 0.64% 0.45% 2.64% N/R 0.02% 0.22% 0.01%

KBRA 1.30% 1.01% 0.42% 13.33% 0.59% 1.62% 0.22%

Moody’s 24.73% 12.40% 26.12% 31.64% 32.83% 31.59% 0.01%

S&P 39.39% 31.77% 44.14% 22.79% 54.36% 50.08% -0.32%

N/R indicates that the NRSRO was not registered in the applicable rating category as of the reporting date. 

As Demotech was not registered as an NRSRO in 2021, year-over-year data is not available.

Percentages have been rounded to the nearest one-hundredth of one percent.

Sources: NRSRO annual certifications for the 2021 and 2022 calendar years, Item 7A on Form NRSRO.
24 | OFFICE OF CREDIT RATINGS

which the NRSRO was registered as of December 

31, 2022, as applicable, as well as the percentage 

change in total ratings for each NRSRO from 2021 

to 2022. Chart 3 displays the percentage of each 

NRSRO’s outstanding credit ratings of the total 

outstanding credit ratings of all NRSROs, for each 

rating category in which the NRSRO was registered, as reported by each NRSRO in its annual 

certification for the calendar year ending December 

31, 2022, as well as the percentage increase or 

decrease in total ratings from 2021 to 2022.33

The large NRSROs accounted for 94.0% of 

all the ratings outstanding as of December 31, 

2022—slightly lower than their 94.4% share as of 

December 31, 2021.34

Charts 2 and 3 also show that AMB, a medium 

NRSRO, had the most credit ratings outstanding 

in the insurance category. In each of the past nine 

years, AMB reported that it had the most credit 

ratings outstanding in the insurance category.35

Chart 4 depicts the percentages of outstanding 

credit ratings attributable to each rating category, 

as reported by the NRSROs in their annual 

certifications for the calendar year ending 

December 31, 2022.

As illustrated by Chart 4, the largest proportion 

of the aggregate credit ratings reported to be 

33 For example, according to Chart 2, AMB reported that it had 7,373 insurance company credit ratings, and the total of 

the credit ratings in that category reported by all NRSROs was 21,791. Therefore, the percentage of NRSRO insurance 

company ratings attributable to AMB was approximately 33.84% (i.e., 7,373 divided by 21,791, expressed as a 

percentage), as shown on Chart 3.

34 In 2007, the year when NRSROs began reporting outstanding ratings on Form NRSRO, the large NRSROs accounted for 

98.8% of all outstanding ratings.

35 See 2021 and 2022 Staff Report on NRSROs, which can be found under “Staff Reports on Nationally Recognized 

Statistical Rating Organizations” and the Annual Reports to Congress and the Summary Examination Reports for 

prior years, which can be found under “Annual Reports to Congress” in the “Reports and Studies” section of the OCR 

webpage, available at https://www.sec.gov/about/divisions-office/office-credit-ratings/reports-and-studies.

outstanding were in the government securities 

category, which may be attributable to the large 

number of government bond issuers (e.g., issuers 

of municipal securities) and their multiple debt 

offerings. The government securities category 

accounted for 78.6% of the total number of 

Chart 4. Breakdown of Ratings Reported 

Outstanding by Rating Category as of 

December 31, 2022

5.9%

7.7%

6.8%

78.6%

1.0%

Government Securities 78.6%

Asset-Backed Securities 7.7%

Financial Institutions 6.8%

Corporate Issuers 5.9%

Insurance Companies 1.0%

Percentages have been rounded to the nearest 

one-tenth of one percent.

Sources: NRSRO annual certifications for the 2022 

calendar year, Item 7A on Form NRSRO.
STAFF REPORT | 25

credit ratings reported across all categories and, 

as shown on Chart 3 and Chart 7, is also the 

most concentrated rating category, with the large 

NRSROs accounting for 97.4% of all outstanding 

government securities ratings. 

Chart 5 depicts the percentages of the credit 

ratings outstanding that are attributable to 

each NRSRO over all the rating categories; 

Chart 6 depicts the percentages of the credit 

ratings outstanding that are attributable to each 

NRSRO over all the rating categories other 

than the government securities category; and 

Chart 7 depicts the percentages of the credit 

ratings outstanding that are attributable to each 

applicable NRSRO in the government securities 

category, in each case, as reported by each 

NRSRO in its annual certification for the calendar 

year ending December 31, 2022. 

A comparison of Chart 5 to Chart 6 illustrates that 

there is less concentration in the non-government 

securities rating categories. S&P’s and Moody’s 

percentage share of all outstanding ratings declines 

by 15.8 and 4.6 percentage points, respectively, 

when government securities are excluded. Fitch’s 

percentage share of outstanding ratings, on the 

other hand, increases by 7.9 percentage points 

when government securities are excluded. The 

percentage share for all the remaining NRSROs 

also increases when government securities are 

excluded. The government securities category 

accounted for 78.6% of the total number of 

credit ratings reported across all categories and, 

Chart 5. Breakdown of Ratings Reported 

Outstanding by NRSRO as of December 31, 2022

1.6%

0.7%

0.4%

0.2%

0.1%

S&P 50.1%

MIS 31.6%

Fitch 12.3%

DBRS 2.9%

KBRA 1.6%

EJR 0.7%

AMB 0.4%

JCR 0.2%

HR 0.1%

Demotech <0.1%

<0.1%

12.3%

31.6%

2.9%

50.1%

Percentages have been rounded to the nearest 

one-tenth of one percent.

Sources: NRSRO annual certifications for the 2022 

calendar year, Item 7A on Form NRSRO.

Chart 6. Breakdown of Non-Government Securities 

Ratings Reported Outstanding by NRSRO as of 

December 31, 2022

6.5%

27.0%

20.2%

5.4%

34.3%

3.4%

1.8%

1.0%

0.3%

S&P 34.3%

MIS 27.0%

Fitch 20.2%

DBRS 6.5%

KBRA 5.4%

EJR 3.4%

AMB 1.8%

JCR 1.0%

HR 0.3%

Demotech 0.1%

0.1%

Percentages have been rounded to the nearest 

one-tenth of one percent.

Sources: NRSRO annual certifications for the 2022 

calendar year, Item 7A on Form NRSRO.
26 | OFFICE OF CREDIT RATINGS

as shown on Chart 3 and Chart 7, is also the 

most concentrated rating category, with the large 

NRSROs accounting for 97.4% of all outstanding 

government securities ratings.

Further, it is difficult to graphically represent the 

relative rating shares of EJR, AMB, HR, JCR, 

and Demotech given that they, in the aggregate, 

36 Information for Demotech outstanding ratings is not included in Charts 8 and 9. As a recently registered NRSRO, 

Demotech first filed its annual certification for the year ending December 31, 2022, and year-over-year data is not 

available.

37 A comparison of Chart 6 in this Report with Chart 6 in Section IV.A.1 of the 2022 Staff Report on NRSROs (available at 

https://www.sec.gov/files/2023-ocr-staff-report.pdf) shows that, other than DBRS, each small and medium NRSRO’s total 

non-government securities ratings share as of December 31, 2022, remained constant or increased compared to the ratings 

shares as of December 31, 2021. The largest percentage share changes were KBRA, whose percentage share increased by 

0.9%, and DBRS, whose percentage share declined by 2.0%.

comprise only 1.4% of all outstanding ratings 

when government securities are included. When 

government securities are excluded, a clearer picture 

of the relative percentage shares of the small and 

medium NRSROs in the categories in which they are 

active can be observed, as illustrated in Chart 6. 

Chart 8 depicts the change in ratings outstanding 

over a period of five years for all ratings other 

than ratings in the government securities category 

reported outstanding by NRSROs, as reported by 

each NRSRO in its annual certifications for the 

calendar years ending December 31, 2018, through 

December 31, 2022.36

As illustrated in Chart 8, reported non-government 

ratings outstanding have remained mostly steady 

across all NRSROs over the past five years and, 

consistent with the information shown in Chart 

3 for the year ending December 31, 2022, the 

larger NRSROs have significantly more ratings 

outstanding than the medium and small NRSROs. 

While modest on the scale of ratings outstanding 

by the large NRSROs, Chart 8 shows a steady 

increase in ratings for KBRA over the past five 

years, a recent decrease in ratings for DBRS and 

EJR, and a modest increase in ratings for the other 

medium and small NRSROs. The changes in 

outstanding ratings over time for these NRSROs 

is more apparent when viewing changes in ratings 

outstanding on a scale that includes only the 

medium and small NRSROs, as illustrated in 

Chart 9.37

Chart 7. Breakdown of Government Securities 

Ratings Reported Outstanding on December 31, 2022

32.83%

54.36%

10.19%

0.59%

0.02%

1.97%

S&P 54.36%

MIS 32.83%

Fitch 10.19%

DBRS 1.97%

KBRA 0.59%

HR 0.03%

JCR 0.02%

0.03%

Percentages have been rounded to the nearest 

one-hundredth of one percent.

This chart only includes the NRSROs that are registered 

in the government securities category.

Sources: NRSRO annual certifications for the 2022 

calendar year, Item 7A on Form NRSRO.
STAFF REPORT | 27

Chart 8. Total Non-Government Ratings Issued by All NRSROs (2018-2022)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2018 2019 2020 2021 2022

DBRS

EJR

Fitch

HR

AMB JCR

KBRA

Moody’s

S&P

Sources: NRSRO annual certifications for the 2018-2022 calendar years, Item 7A on Form NRSRO.

Chart 9. Total Non-Government Ratings Issued by Medium and Small NRSROs (2018-2022)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2018 2019 2020 2021 2022

DBRS

EJR

HR

JCR

KBRA

AMB

Sources: NRSRO annual certifications for the 2018-2022 calendar years, Item 7A on Form NRSRO.
28 | OFFICE OF CREDIT RATINGS

Chart 10 depicts the change in ratings outstanding 

over a period of five years for all ratings in the 

asset-backed securities rating class reported 

outstanding by NRSROs.38

As discussed in more detail in Section IV.A.2, 

medium NRSROs have been able to make inroads 

in the asset-backed securities rating class. Chart 

10 provides a graphic representation of changes 

in ratings outstanding in this rating class since 

2018. Both DBRS and KBRA have increased 

or maintained the number of ratings reported 

outstanding over the past five years. During this 

same period, the ratings counts for Fitch and 

38 Demotech, EJR, HR, and JCR are not registered with the Commission in the asset-backed securities category (see Chart 

1). While AMB is registered to rate asset-backed securities, as shown in Chart 2, it only has seven outstanding asset-backed 

securities ratings as of December 31, 2022. For these reasons, Chart 10 only includes data from DBRS, Fitch, KBRA, 

Moody’s, and S&P.

39 Effective January 1, 2015, the Instructions for Exhibit 8 to Form NRSRO were amended to clarify that NRSROs must 

include credit analyst supervisors in the total number of credit analysts disclosed on Exhibit 8. This amendment was 

designed to enhance consistency of the disclosures on Exhibit 8 of Form NRSRO. See 2014 Adopting Release, 79 FR at 

55222 (discussing the clarifying amendments to Exhibit 8 of Form NRSRO).

S&P have remained fairly steady. The number of 

outstanding ratings for Moody’s has not changed 

significantly in total, but Moody’s has shown an 

increase in ratings outstanding in the past two years. 

b. NRSRO Analytical Staffing Levels

Chart 11 reports the number of credit analysts 

(including credit analyst supervisors) and the 

number of credit analyst supervisors employed by 

each of the NRSROs, as reported on Exhibit 8 to 

Form NRSRO.39

The large NRSROs report employing 4,754 credit 

analysts (including supervisors), which is approxiChart 10. Total ABS Ratings Issued by All NRSROs (2018-2022)

0

10,000

20,000

30,000

40,000

50,000

60,000

2018 2019 2020 2021 2022

DBRS

Fitch

KBRA

Moody’s

S&P

Sources: NRSRO annual certifications for the 2018-2022 calendar years, Item 7A on Form NRSRO.
STAFF REPORT | 29

mately 80.6% of the total number employed by all 

of the NRSROs. The small and medium NRSROs, 

in the aggregate, employ approximately 19.4% of 

all credit analysts employed by NRSROs.40 Total 

NRSRO analytical staff increased by about 6% 

compared to the information reported in the prior 

year annual certifications. 

40 Based on reports by the NRSROs on their annual certifications for the applicable calendar year, the small and medium 

NRSROs, in the aggregate, employed approximately 11.4% of all NRSRO analysts in 2014, 12.8% of all NRSRO 

analysts in 2015, 14.6% of all NRSRO analysts in 2016, 15.2% of all NRSRO analysts in 2017, 15.4% of all NRSRO 

analysts in 2018, 17.0% of all NRSRO analysts in 2019, 16.3% of all NRSRO analysts in 2020, and 18.4% of all 

NRSRO analysts in 2021. 

41 Pursuant to Rule 17g-3(a)(3), each NRSRO is required to file annually with the Commission an unaudited revenue report, 

which includes revenue received from determining and maintaining credit ratings, subscribers and subscription services, 

granting licenses or rights to publish credit ratings, and other services and products. NRSROs are not required to make 

these revenue reports publicly available. 

42 Following its acquisition of DBRS in July 2019, Morningstar, Inc. began to integrate the businesses of DBRS and 

Morningstar Credit Ratings, LLC (MCR), which at the time was also registered as an NRSRO. Effective December 30, 

2019, MCR withdrew its registration as an NRSRO. MCR continued to operate as a credit rating affiliate of DBRS until 

November 23, 2020. Additionally, as a recently registered NRSRO, Demotech first filed the financial report required under 

Rule 17g-3(a)(3) for the fiscal year ended in 2022 and is not included in prior years.

c. NRSRO Revenue

Chart 12 shows the percentage of total NRSRO 

revenues attributable to the large, medium, and 

small NRSROs since 2019.41 Changes to the 

composition of certain registered NRSROs and 

the registration of an additional NRSRO in recent 

years may limit the comparability of the revenue 

distribution across the years.42 Nonetheless, 

observations of changes to the distribution of 

revenue may provide some insight into the overall 

competitive landscape. Following a small increase 

in fiscal year 2020, the percentage of aggregate 

NRSRO revenue reported by the large NRSROs 

Chart 11. NRSRO Credit Analysts and 

Credit Analyst Supervisors

NRSRO

Credit Analysts 

(Including Credit 

Analyst Supervisors)

Credit Analyst 

Supervisors

AMB 160 48

DBRS 584 157

Demotech 4 1

EJR 26 14

Fitch 1,372 333

HR 66 11

JCR 61 27

KBRA 242 55

Moody’s 1,796 243

S&P 1,586 133

Total 5,897 1,022

Sources: Exhibit 8 to Form NRSRO, in effect as of each 

NRSRO’s annual certification for the 2022 calendar year 

filed on or before March 31, 2023.

Chart 12. NRSRO Fiscal Year Revenue as a 

Percentage of Aggregate Reported Revenue

2022 2021 2020 2019

Large NRSROs 91.1% 93.2% 94.1% 93.3%

Medium NRSROs 7.3% 5.6% 5.1% 5.9%

Small NRSROs 1.6% 1.1% 0.8% 0.8%

Percentages have been rounded to the nearest 

one-tenth of one percent.

Sources: Financial reports filed with the Commission 

under Rule 17g-3(a)(3) for fiscal years ended 2019 

through 2022. For the preparation of this Report, if 

an NRSRO reported revenue in a foreign currency, the 

revenue was converted to U.S. dollars using the average 

exchange rate over all U.S. banking days in the fiscal 

year of such NRSRO.
30 | OFFICE OF CREDIT RATINGS

has fallen below the level reported for fiscal year 

2019. The revenue share of the medium NRSROs 

has increased from 2021, reaching a new high 

of 7.3% in 2022. The small NRSROs’ share of 

overall NRSRO revenue has also increased this 

year, growing by 0.5 percentage points in fiscal year 

2022 compared with 2021. 

Further revenue information is available for 

NRSROs that are owned by public companies. 

The following information is from the 2022 annual 

reports of public companies with an ownership 

interest in an NRSRO:

■ Moody’s Corporation, which is Moody’s parent 

company, reported $2.7 billion in Moody’s 

external revenue for 2022, a 29% decrease from 

2021. This decrease, according to the report, 

was due to muted credit market activity across 

all sectors given ongoing market volatility and 

central bank actions. The corporate finance 

group, financial institutions group, public, 

project and infrastructure finance group, and 

structured finance group of Moody’s each had a 

decrease in revenue compared to 2021 results.43

■ S&P Global Inc., which is S&P’s parent 

company, reported $3.1 billion in S&P’s 

revenue for 2022, a 26% decrease from 2021. 

This decrease, according to the report, was due 

to lower corporate bond ratings revenue, bank 

loan ratings revenue, and structured finance 

revenue. Non-transaction revenue decreased 

43 See Moody’s Corporation, Annual Report on Form 10-K for the year ended December 31, 2022, available at https://www.

sec.gov/Archives/edgar/data/1059556/000105955623000016/mco-20221231.htm.

44 See S&P Global Inc., Annual Report on Form 10-K for the year ended December 31, 2022, available at https://www.sec.

gov/ix?doc=/Archives/edgar/data/64040/000006404023000058/spgi-20221231.htm.

45 See Morningstar, Inc., Annual Report on Form 10-K for the year ended December 31, 2022, available at https://www.

sec.gov/ix?doc=/Archives/edgar/data/1289419/000128941923000005/morn-20221231.htm. Transaction-based revenue 

from one-time, transaction-based fees for ratings on newly-issued securities represented 57.6% of the revenue generated by 

DBRS, with the remainder classified as transaction related revenue or revenue generated by annual fees tied to surveillance, 

research, and other services.

primarily due to an unfavorable impact of 

foreign exchange rates, a decrease in entity 

credit ratings revenue, and lower revenue from 

S&P’s Ratings Evaluation Service, an analytical 

tool for entities that are considering strategic 

or financial initiatives that could impact their 

creditworthiness.44

■ Morningstar, Inc., which is DBRS’s parent 

company, reported $236.9 million in revenue 

from DBRS, a 12.6% decrease in revenue 

from 2021. This decrease, according to the 

report, was due to a sharp decrease in credit 

issuance in the second half of the year, along 

with significant declines in commercial and 

residential mortgage-backed securities ratings. 

Transaction-based revenue from one-time, 

transaction-based fees for ratings on newlyissued securities decreased 11% in 2022.45

Recent regulatory filings show a decline in revenues 

at Moody’s and DBRS and a slight increase in 

revenue at S&P in the first half of 2023 compared 

to the same period in 2022. Moody’s Corporation 

reported $1.5 billion in Moody’s external revenue 

for the first half of 2023, a 3% decrease compared 

with the same period in 2022. This decrease, 

according to the report, was due to declines in 

bank loan and structured finance issuance resulting 

from market volatility relating to macroeconomic 

uncertainties, higher borrowing costs, and the 

Russia-Ukraine conflict. This decrease in external 

revenue was partially offset by an increase in 
STAFF REPORT | 31

investment grade corporate debt issuance compared 

to suppressed activity in 2022.46

S&P Global Inc. reported $1.7 billion in revenue 

at S&P for the first half of 2023, a 1% increase 

compared with the same period in 2022. This 

increase, according to the report, was due to 

growth in corporate bond ratings revenue driven 

by increased investment-grade and high-yield 

issuance volumes due to higher refinancing activity. 

According to the report, the increase in revenue 

was partially offset by lower bank loan ratings 

revenue driven by decreased issuance volumes.47

Morningstar, Inc. reported $101.0 million in DBRS 

revenue for the first half of 2023, a 24.9% decrease 

compared with the same period in 2022. This 

decrease, according to the report, primarily resulted 

from a sharp drop in revenue from commercial 

mortgage-backed securities ratings. Additionally, 

revenue from financial institutions and sovereigns 

also declined but were partially mitigated by 

growth in revenue from asset-backed securities 

46 See Moody’s Corporation, Quarterly Report on Form 10-Q for the period ended June 30, 2023, available at https://www.

sec.gov/ix?doc=/Archives/edgar/data/0001059556/000105955623000052/mco-20230630.htm. 

47 See S&P Global Inc., Quarterly Report on Form 10-Q, for the period ended June 30, 2023, available at https://www.sec.

gov/ix?doc=/Archives/edgar/data/64040/000006404023000159/spgi-20230630.htm. 

48 See Morningstar, Inc., Quarterly Report on Form 10-Q for the period ended June 30, 2023, available at https://www.sec.

gov/ix?doc=/Archives/edgar/data/0001289419/000128941923000015/morn-20230630.htm. 

49 Unless noted otherwise, all market share percentages in this Section IV.A.2 are based on dollar amounts of issuance.

50 DBRS and KBRA are the only medium or small NRSROs that actively rate asset-backed securities. Demotech, EJR, 

HR, and JCR are not registered with the Commission in the asset-backed securities category. See Chart 1. While AMB 

is registered to rate asset-backed securities, as shown in Chart 2, it only has seven outstanding asset-backed securities 

ratings as of December 31, 2022. For these reasons, this section only discusses observations related to DBRS, Fitch, KBRA, 

Moody’s, and S&P, which are the five NRSROs registered in the asset-backed securities category with current asset-backed 

securities rating activity.

51 See Commercial Mortgage Alert website, available at https://www.greenstreet.com/news/commercial-mortgage-alert and 

Asset-Backed Alert website, available at https://www.greenstreet.com/news/asset-backed-alert. The information in Charts 

13 through 16 is based on information from the Commercial Mortgage Alert’s CMBS database as of July 28, 2023, and 

the information in Charts 17 through 19 and the accompanying discussion is based on information from the Asset-Backed 

Alert’s ABS database as of July 28, 2023. Although analysis of the information from the databases may provide insight 

into recent developments regarding the state of competition among NRSROs in the asset-backed securities rating category, 

it has certain limitations. For instance, the information treats each transaction as one undivided whole. An NRSRO is 

counted as having rated a transaction, and the aggregate amount of securities issued, even if the NRSRO rated only a 

portion of it.

ratings, corporate credit ratings, and revenue 

related to data products.48

2. Market Share Observations in the AssetBacked Securities Rating Category

As noted in Section IV.A.1.a of this Report, the 

number of ratings recently issued by NRSROs 

may give a clearer picture of competition than 

the number of ratings each NRSRO currently has 

outstanding. The market share data discussed in 

this Section IV.A.249 provides information about 

ratings issued in 2021, 2022, and the first half 

of 2023 and shows that DBRS and KBRA have 

achieved meaningful market share percentages in 

recent years with respect to certain types of assetbacked securities.50

Section IV.A.2.a and 2.b below discuss NRSRO 

market share information with respect to certain 

asset-backed securities, based on information 

from the databases available on the Commercial 

Mortgage Alert and Asset-Backed Alert websites.51
32 | OFFICE OF CREDIT RATINGS

a. CMBS

Charts 13 through 16 provide information 

concerning U.S.52 CMBS53 ratings by NRSROs, 

based on information from the Commercial 

Mortgage Alert database. NRSRO market share 

varies between the conduit CMBS and singleborrower CMBS segments,54 the two segments 

that account for most of the non-agency55 U.S. 

52 Based on information about the databases available on the Asset-Backed Alert and Commercial Mortgage Alert websites, 

references to “U.S.” CMBS, MBS, ABS, and CLO issuance and market shares in this Section IV.A.2 reflect securities 

issued for sale primarily in the U.S., which include securities issued publicly and those issued under Rule 144A under the 

Securities Act of 1933.

53 Based on information about the database available on the Commercial Mortgage Alert website, the “CMBS” category 

is comprised of transactions secured by a static pool of mortgages or leases on income producing properties, either 

commercial or multi-family.

54 The term “conduit” refers to a financial intermediary that functions as a link, or conduit, between the lender(s) originating 

loans and the ultimate investor(s). The conduit makes loans or purchases loans from third party correspondents under 

standardized underwriting parameters and once sufficient volume has accumulated, pools the loans for sale to investors 

in the CMBS market. See https://www.crefc.org/uploadedFiles/Site_Framework/Industry_Resources/Glossary%20

Revised%202014%20-Update.pdf. In contrast, a single-borrower transaction includes commercial mortgage loans made 

to a single borrower. 

55 “Non-agency” CMBS refers to CMBS that are not issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. 

“Agency” CMBS generally refers to CMBS that are issued or guaranteed by such entities. 

56 Total U.S. CMBS transactions include single-borrower CMBS, conduit CMBS, and other types of CMBS, such as large 

loan and small-balance/legacy conduit CMBS transactions.

57 Only agency CMBS transactions with a rating from one or more NRSROs are included for determining NRSRO market 

share in the agency CMBS category.

58 The market share percentages for each NRSRO in Charts 13 through 16 reflect the amount rated by the NRSRO as a 

percentage of the total amount rated by one or more NRSRO. Market share percentages are provided based on both 

dollar amounts of issuance and number of deals rated. Because it is typical for more than one NRSRO to rate a particular 

transaction, the sum of the market share percentages may exceed 100% and the sum of the amounts attributed to each 

NRSRO may exceed the total rated amount. The source of the data for these charts is the Commercial Mortgage Alert’s

CMBS database as of July 28, 2023.

CMBS transactions rated by NRSROs. The charts 

include reported market share information for total 

non-agency U.S. CMBS transactions,56 U.S. conduit 

CMBS transactions, U.S. single-borrower CMBS 

transactions, and agency CMBS transactions57 for 

the first half of calendar year 2023 and calendar 

years 2022 and 2021.58

Chart 13. Rating Agency Market Shares for Total Non-Agency U.S. CMBS Issued in 2021, 2022, and 

First Half of 2023

1H-2023 

Rank NRSRO

1H-2023 

Issuance 

($Mil.

No. of 

deals

Market 

Share %

($)/(#)

2022 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Fitch 10,638 15 78.0/71.4 38,114 37 54.3/45.7 57,361 60 51.9/42.3

2 Moody’s 7,747 12 56.8/57.1 46,275 51 65.9/63.0 38,342 45 34.7/31.7

3 KBRA 7,663 11 56.2/52.4 28,249 28 40.2/34.6 46,466 47 42.0/33.1

4 S&P 4,293 6 31.5/28.6 17,589 21 25.0/25.9 17,589 55 15.9/38.7

5 DBRS 2,650 4 19.4/19.0 26,126 27 37.2/33.3 56,655 71 51.2/50.0

Total Rated Market 13,638 21 70,231 81 110,557 142

Source: Commercial Mortgage Alert’s CMBS database as of July 28, 2023.
STAFF REPORT | 33

Chart 14. Rating Agency Market Shares for U.S. Conduit CMBS Issued in 2021, 2022, and First Half of 2023

1H-2023 

Rank NRSRO

1H-2023 

Issuance 

($Mil.

No. of 

deals

Market 

Share %

($)/(#)

2022 

Issuance 

($Mil.)

No. of 

deals

Market 

Share % 

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Fitch 6,989 9 100.0/100.0 23,750 25 100.0/100.0 31,428 32 100.0/100.0

1 KBRA 6,989 9 100.0/100.0 17,015 18 71.6/72.0 25,809 26 82.1/81.3

2 Moody’s 3,597 5 51.5/55.6 13,615 14 57.3/56.0 6,771 7 21.5/21.9

3 S&P 3,393 4 48.5/44.4 9,646 10 40.6/40.0 22,906 22 72.9/68.8

4 DBRS 0 0 0.0/0.0 8,889 9 37.4/36.0 6,984 7 22.2/21.9

Total Rated Market 6,989 9 23,750 25 31,428 32

Source: Commercial Mortgage Alert’s CMBS database as of July 28, 2023.

Chart 15. Rating Agency Market Shares for U.S. Single-Borrower CMBS Issued in 2021, 2022, and 

First Half of 2023

1H-2023 

Rank NRSRO

1H-2023 

Issuance 

($Mil.

No. of 

deals

Market 

Share %

($)/(#)

2022 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Moody’s 4,150 7 62.4/58.3 32,383 36 70.1/65.5 31,571 38 39.9/34.5

2 Fitch 3,649 6 54.9/50.0 14,364 12 31.1/21.8 25,933 28 32.8/25.5

3 DBRS 2,650 4 39.9/33.3 17,237 18 37.3/32.7 49,671 64 62.8/58.2

4 S&P 900 2 13.5/16.7 7,943 11 17.2/20.0 22,979 33 29.0/30.0

5 KBRA 674 2 10.1/16.7 10,957 9 23.7/16.4 20,657 21 26.1/19.1

Total Rated Market 6,649 12 46,204 55 79,128 110

Source: Commercial Mortgage Alert’s CMBS database as of July 28, 2023.

Chart 16. Rating Agency Market Shares for Agency CMBS Issued in 2021, 2022, and First Half of 2023

1H-2023 

Rank NRSRO

1H-2023 

Issuance 

($Mil.

No. of 

deals

Market 

Share %

($)/(#)

2022 

Issuance 

($Mil.)

No. of 

deals

Market 

Share % 

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 KBRA 5,615 5 87.5/83.3 15,690 13 64.8/65.0 7,538 7 31.8/35.0

2 Fitch 4,570 4 71.2/66.7 14,240 12 58.8/60.0 22,469 19 94.9/95.0

3 Moody’s 1,847 2 28.8/33.3 9,989 8 41.2/40.0 1,216 1 5.1/5.0

4 DBRS 802 1 12.5/16.7 8,539 7 35.2/35.0 16,147 13 68.2/65.0

Total Rated Market 6,417 6 24,229 20 23,685 20

Source: Commercial Mortgage Alert’s CMBS database as of July 28, 2023.
34 | OFFICE OF CREDIT RATINGS

Charts 13 through 16 show that in 2021, 2022, 

and the first half of 2023 the large NRSROs 

generally held a large percentage of the market 

shares in rating U.S. CMBS rated transactions, 

but DBRS and KBRA achieved significant market 

shares as well. 

As illustrated in Chart 13, in the first half of 2023, 

KBRA had the third-highest market share in the 

non-agency U.S. CMBS segment. In 2022, KBRA 

and DBRS had the third- and fourth-highest market 

shares, respectively. In 2021, DBRS was closely 

behind Fitch for the second-highest market share 

measured by issuance amount, and KBRA had the 

third-highest market share by both issuance amount 

and number of deals. KBRA has consistently 

attained a market share over 40% by issuance 

amount since 2021, and in 2021 KBRA obtained a 

higher market share than Moody’s and S&P.

Since 2021, Fitch has maintained the highest 

market share in the U.S. conduit CMBS segment, 

rating all rated transactions. However, as illustrated 

in Chart 14, KBRA has maintained the secondhighest market share in the U.S. conduit CMBS 

segment since 2021. Additionally, as of the first 

59 Based on information about the database available on the Asset-Backed Alert website, the “ABS” category is comprised 

of securities that are collateralized by assets other than the following: CMBS; MBS; CLOs; collateral debt obligations 

collateralized primarily by other securities; issuances by municipalities; tax exempt issues; issues that are fully retained by 

an affiliate of the deal sponsor or sold to a commercial paper-conduit operated by an affiliate of the sponsor; commercial 

paper and other continuously offered securities such as medium-term notes; and refinancing of previously offered 

securities.

60 Based on information about the database available on the Asset-Backed Alert website, the “MBS” category is comprised of 

registered securities backed by U.S. first-lien residential properties (typically jumbo mortgages that would otherwise meet 

the criteria of Fannie Mae and Freddie Mac) and Alt-A home loans. 

61 Based on information about the database available on the Asset-Backed Alert website, the “CLO” category is comprised 

of deals that take the form of collateralized loan obligations (exclusive of collateralized debt obligations collateralized 

primarily by other securities). In the period reviewed, these consisted of deals involving corporate loan arbitrage, small 

business/SME loans, and commercial real estate loans.

62 The market share percentages for each NRSRO in Charts 17 through 19 reflect the amount rated by the NRSRO as a 

percentage of the total amount rated by one or more NRSRO. Market share percentages are provided based on both 

dollar amounts of issuance and number of deals rated. Because it is typical for more than one NRSRO to rate a particular 

transaction, the sum of the market share percentages may exceed 100% and the sum of the amounts attributed to each 

NRSRO may exceed the total rated amount. The source of the data for these charts is the Asset-Backed Alert’s ABS 

database as of July 28, 2023.

half of 2023, KBRA has rated all U.S. conduit 

CMBS rated transactions, and in 2020 and 2021 

DBRS rated over 20% of these transactions. 

As illustrated in Chart 15, DBRS achieved significant market share in this segment, achieving the 

highest market share in 2021, the second-highest 

for 2022, and the third-highest for the first half of 

2023. Additionally, KBRA rated nearly 25% of 

the issuance amount in 2022 and over 25% of the 

issuance amount in 2021.

As illustrated in Chart 16, KBRA had the highest 

market share in the agency CMBS segment during 

the first half of 2023 and in 2022. Additionally, 

DBRS had the second-highest market share in 2021. 

b. ABS/MBS/CLO

Charts 17 through 19 provide information 

concerning U.S. ABS,59 U.S. MBS,60 and U.S. CLO61

ratings by NRSROs, based on information from 

the Asset-Backed Alert database. The charts include 

reported market share information for these transactions for the first half of calendar year 2023 and 

calendar years 2022 and 2021.62
STAFF REPORT | 35

Chart 17. Rating Agency Market Shares for U.S. ABS Issued in 2021, 2022, and First Half of 2023

1H-2023 

Rank NRSRO

1H-2023 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2022 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 S&P 79,177 108 59.0/49.3 144,924 182 56.3/42.7 162,345 217 55.1/47.1

2 Fitch 73,543 86 54.8/39.3 116,645 145 45.3/34.0 102,453 102 34.8/22.1

3 Moody’s 65,782 85 49.0/38.8 130,187 161 50.6/37.8 146,191 154 49.6/33.4

4 KBRA 26,394 69 19.7/31.5 56,005 153 21.8/35.9 73,391 188 24.9/40.8

5 DBRS 19,210 45 14.3/20.5 35,078 84 13.6/19.7 68,983 137 23.4/29.7

Total Rated Market 134,120 219 257,420 426 294,687 461

Source: Asset-Backed Alert’s ABS database as of July 28, 2023.

Chart 18. Rating Agency Market Shares for U.S. MBS Issued in 2021, 2022, and First Half of 2023

1H-2023 

Rank NRSRO

1H-2023 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2022 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Fitch 21,395 63 70.8/68.5 48,257 113 43.9/42.3 65,263 149 40.1/41.0

2 DBRS 15,142 43 50.1/46.7 39,010 100 35.5/37.5 62,200 115 38.2/31.7

3 KBRA 8,865 25 29.3/27.2 57,810 124 52.6/46.4 63,376 143 38.9/39.4

4 S&P 4,012 13 13.3/14.1 22,106 58 20.1/21.7 25,492 76 15.6/20.9

5 Moody’s 2,168 6 7.2/6.5 37,000 72 33.6/27.0 79,738 140 48.9/38.6

Total Rated Market 30,220 92 109,984 267 162,937 363

Source: Asset-Backed Alert’s ABS database as of July 28, 2023.

Chart 19. Rating Agency Market Shares for U.S. CLOs Issued in 2021, 2022, and First Half of 2023

1H-2023 

Rank NRSRO

1H-2023

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2022 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 S&P 30,652 71 56.9/55.5 65,408 140 42.0/41.2 254,633 532 56.1/54.3

2 Moody’s 29,273 69 54.3/53.9 93,372 202 59.9/59.4 225,675 506 49.7/51.7

3 Fitch 22,769 53 42.2/41.4 75,505 158 48.4/46.5 76,710 158 16.9/16.1

4 KBRA 740 3 1.4/2.3 3,590 10 2.3/2.9 16,342 32 3.6/3.3

5 DBRS 0 0 0.0/0.0 1,047 4 0.7/1.2 3,227 4 0.7/0.4

Total Rated Market 53,896 128 155,890 340 453,835 979

Source: Asset-Backed Alert’s ABS database as of July 28, 2023.
36 | OFFICE OF CREDIT RATINGS

Chart 17 shows that DBRS and KBRA have 

achieved and maintained meaningful U.S. ABS 

rating market shares, although their relative shares 

have declined since 2021. S&P, Moody’s, and Fitch 

have consistently achieved the highest market shares 

based on issuance amount. KBRA has maintained 

market share of approximately 20% or higher since 

2021 and DBRS approximately 14% or higher.

Chart 17 presents an overview of NRSRO market 

share for ABS overall, but an analysis of the data 

underlying the chart shows that the market shares 

vary considerably across various types of ABS 

products. For example, DBRS and KBRA have 

gained significant market share in some newer or 

less traditional types of asset-backed securities. 

They are significant raters of securities backed by 

unsecured consumer loans, including consumer 

loans originated through marketplace lending 

platforms. DBRS and KBRA had the two highest 

market shares in this category in 2021, 2022, and 

the first half of 2023, with each rating between 

42.7% to 56.6% of the issuance amount of the rated 

transactions during this period. Comparatively, 

Moody’s, S&P, and Fitch each rated less than 30% 

of the issuance amount over the same time period.63

There are additional examples of market share 

gains achieved by a medium NRSRO in discrete 

63 Asset-Backed Alert’s ABS database indicates that 74 unsecured consumer loan transactions totaling $27.7 billion were 

issued in 2021, 75 unsecured consumer loan transactions totaling $26.1 billion were issued in 2022, and 26 unsecured 

consumer loan transactions totaling $8.9 billion were issued during the first half of 2023.

64 Asset-Backed Alert’s ABS database indicates that 16 aircraft-lease receivable transactions totaling $9.2 billion were issued 

during 2021, and two aircraft-lease receivable transactions totaling $1.1 billion were issued during 2022.

65 Asset-Backed Alert’s ABS database indicates that 19 whole-business securitization transactions totaling $13.9 billion were 

issued during 2021, 14 whole-business securitization transactions totaling $6.3 billion were issued during 2022, and three 

whole business securitization transactions totaling $1.6 billion were issued during the first half of 2023.

66 Asset-Backed Alert’s ABS database indicates that 13 small business loan transactions totaling $2.1 billion were issued 

in 2021, 17 small business loan transactions totaling $7.5 billion were issued in 2022, and nine small business loan 

transactions totaling $1.2 billion were issued during the first half of 2023.

67 Asset-Backed Alert’s ABS database indicates that 50 student loan transactions totaling $32.3 billion were issued in 2021, 

11 student loan transactions totaling $7.5 billion were issued in 2022, and eight student loan transactions totaling $4.7 

billion were issued during the first half of 2023.

asset classes. For instance, KBRA rated 85.6% 

and 100% of the issuance amount of aircraftlease receivables transactions during 2021 and 

2022, respectively, while Moody’s, S&P, and Fitch 

each rated less than 55% of the issuance amount 

over the same time period.64 KBRA also had the 

second-highest market share for whole-business 

securitizations in 2021, and the highest market 

share in 2022 and the first half of 2023, rating 

60.2%, 92.1% and 100%, respectively, of the 

issuance amount of such transactions.65 DBRS 

and KBRA had the two highest market shares 

for small business loan transactions in 2021, 

2022, and the first half of 2023, with each rating 

between 32.6% to 78.7% during this period. 

Comparatively, Moody’s, S&P, and Fitch each 

rated less than 12.8% of the issuance amount over 

the same time period.66

DBRS and KBRA have been able to gain market 

share rating certain more traditional types of ABS 

as well. For example, DBRS rated 90.2%, 94.1%, 

and 82.3% of the issuance amount of student loan 

transactions during 2021, 2022, and the first half 

of 2023, respectively, which represented the firstor second-highest market share.67

Both DBRS and KBRA have maintained a significant market share in certain auto-related asset-
STAFF REPORT | 37

backed securities. In 2021, 2022, and the first half 

of 2023, DBRS rated 33.1%, 30.6%, and 30.4% 

of subprime auto loan transactions, respectively. 

KBRA also maintained a significant market share; 

in 2021, 2022, and the first half of 2023, KBRA 

rated 35.1%, 37.8%, and 40.0% of the issuance 

amount of subprime auto loan transactions.68

Chart 18 shows that the U.S. MBS segment 

remains competitive. DBRS’s market share by 

issuance amount went from 38.2% in 2021 to 

35.5% in 2022 to 50.1% in the first half of 2023, 

while KBRA’s market share by issuance amount 

went from 38.9% in 2021 to 52.6% in 2022 to 

29.3% in the first half of 2023. DBRS and KBRA 

have, however, achieved notable market share 

in certain types of ABS related to the residential 

housing market, but not considered to be MBS 

under the Asset-Backed Alert database’s criteria 

and therefore included within the data shown in 

Chart 17. For example, in 2021, 2022, and the 

first half of 2023, DBRS rated 79.5%, 85.0%, and 

95.1% of the issuance amount of re-performing 

mortgage transactions, respectively, which represented the first- or second-highest market share.69

Additionally, KBRA and DBRS have maintained 

a significant market share in subprime mortgage 

transactions and risk transfer transactions. For 

68 Asset-Backed Alert’s ABS database indicates that 68 subprime auto loan transactions totaling $43.5 billion were issued 

in 2021, 63 subprime auto loan transactions totaling $33.5 billion were issued in 2022, and 41 subprime auto loan 

transactions totaling $19.7 billion were issued during the first half of 2023.

69 Asset-Backed Alert’s ABS database indicates that 32 re-performing mortgage transactions totaling $19.8 billion, were 

issued in 2021, 29 re-performing mortgage transactions totaling $14.4 billion were issued in 2022, and ten re-performing 

mortgage transactions totaling $4.7 billion were issued during the first half of 2023.

70 Asset-Backed Alert’s ABS database indicates that 93 subprime mortgage transactions totaling $29.3 billion, and 37 risk transfer 

transactions totaling $23.5 billion were issued during 2021, 104 subprime mortgage transactions totaling $37.9 billion, and 

26 risk transfer transactions totaling $23.1 billion were issued during 2022, and 43 subprime mortgage transactions totaling 

$14.7 billion, and 10 risk transfer transactions totaling $5.9 billion were issued during the first half of 2023.

71 See Statement of Jim Nadler, President and CEO, Kroll Bond Rating Agency, Bond Rating Agencies: Examining the 

“Nationally Recognized” Statistical Rating Organizations Hearing Before the Subcommittee on Investor Protection, 

Entrepreneurship and Capital Markets of the House Committee on Financial Services, 117th Congress (July 21, 2021), 

available at https://democrats-financialservices.house.gov/UploadedFiles/HHRG-117-BA16-Wstate-NadlerJ-20210721.

pdf; see also Letter from KBRA to the Commission (Aug. 19, 2014), available at https://www.sec.gov/comments/s7-18-11/

s71811-88.pdf. 

subprime mortgage transactions from 2021 to the 

first half of 2023, KBRA rated between 34.5% 

and 52.4% and DBRS rated between 26.6% and 

34.9% of the issuance amount; for risk transfer 

transactions, KBRA rated between 26.1% and 

61.3% and DBRS rated between 26.7% and 

50.0% of the issuance amount.70

Finally, as shown in Chart 19, although DBRS 

and KBRA have attained a foothold in the U.S. 

CLO segment, their individual market shares have 

decreased. In comparison, S&P, Moody’s, and 

Fitch have maintained the highest market shares 

since 2021.

3. Barriers to Entry

Barriers to entry continue to exist in the credit 

ratings industry, presenting competitive challenges 

for the small and medium NRSROs.

One such potential barrier that has been raised 

by certain small and medium NRSROs is that the 

investment management contracts of some institutional fund managers and the investment guidelines 

of some fixed income mutual fund managers, 

pension plan sponsors, and endowment fund 

managers require the use of ratings of specified 

NRSROs.71 The effect of these requirements can 
38 | OFFICE OF CREDIT RATINGS

be to increase the demand for and liquidity of 

securities bearing the ratings of specified rating 

agencies, which may provide an incentive for 

issuers to obtain ratings from the specified agencies. 

Historically, many of these guidelines refer to the 

ratings from the large NRSROs by name (i.e., 

Fitch, Moody’s, and S&P). Despite reports that 

investors are increasingly changing their guidelines 

to allow for investments in securities rated by a 

wider group of NRSROs,72 investment guidelines 

continue to be identified as a factor impacting the 

selection of NRSROs to rate certain transactions.73

The inclusion requirements of some fixed income 

indices may pose a similar barrier to entry. To 

be included in certain of these indices, securities 

must be rated by specified NRSROs.74 Certain 

investment companies try to closely track the 

performance of the indices by purchasing the 

securities included in them (index funds). Index 

funds have grown as a share of the fund market, 

72 See, e.g., Big Investors Accept More Rating Agencies, Asset-Backed Alert, May 19, 2017.

73 See S&P Vaults Past Moody’s in Conduit Sector, Commercial Mortgage Alert, Jan. 24, 2020, see also S&P, Moody’s Duke 

It Out in Fitch’s Shadow, Commercial Mortgage Alert, Jan. 25, 2019.

74 See, e.g., Bloomberg Fixed Income Index Methodology, Bloomberg Fixed Income Indices, August 24, 2021; FTSE Fixed 

Income Index Guide, FTSE Russell an LSEG Business, June 2023. 

75 See, e.g., Rating Firms Seek Changes to Index, Asset-Backed Alert, May 26, 2017; see also Investment Company Institute, 

2022 Investment Company Fact Book (2022), at 29, available at https://www.icifactbook.org/ (index funds made up 21% 

of assets in long-term funds at the end of 2011 and 43% at the end of 2021).

76 See Fitch Ratings Joins J.P. Morgan High Yield Bond Indices, Fitch Ratings, June 28, 2017. In a related example, 

DBRS announced that its ratings would be included in the determination of index credit quality classifications for 

CAD-denominated securities in the Bloomberg Barclays Canada Aggregate Index and the Global Aggregate Index, 

resulting in approximately 49 securities being added to the Canadian Aggregate Index. See DBRS Bond Ratings to Be 

Included in the Bloomberg Barclays Canada Aggregate Index, DBRS, Inc., Apr. 19, 2018.

77 See Written Testimony of Angela Liang, General Counsel and Executive Committee Member, Kroll Bond Rating Agency, 

Bond Rating Agencies: Examining the “Nationally Recognized” Statistical Rating Organizations Hearing Before the 

Subcommittee on Investor Protection, Entrepreneurship and Capital Markets of the House Committee on Financial 

Services, 117th Congress (May 11, 2022), available at https://www.congress.gov/117/meeting/house/114740/witnesses/

HHRG-117-BA16-Wstate-LiangA-20220511.pdf. 

78 See, e.g., Section IV.C of the March 2012 Annual Report, available at https://www.sec.gov/divisions/marketreg/

ratingagency/nrsroannrep0312.pdf. As discussed in the March 2012 Report, economic barriers to entry include issuers and 

market participants favoring well-established NRSROs due to their reputation, and economies of scale which may allow 

larger NRSROs to offer advantageous services or pricing. Academic literature has continued to identify these as barriers to 

entry. See, e.g., Sangiorgi, F. and Spatt, C., The Economics of Credit Rating Agencies, Foundations and Trends in Finance, 

12, 1-116 (2017), available at https://ssrn.com/abstract=3055889.

79 Pub. L. No. 111-203, § 932, 124 Stat. 1376, 1872-83 (2010).

and they can increase the demand for securities 

bearing the ratings of particular NRSROs.75 For 

instance, in 2018, Fitch announced that its ratings 

had been added to the J.P. Morgan High-Yield 

Bond Indices, noting that investors rely on such 

indices to determine which bonds suit their level 

of credit risk.76 Similarly, KBRA testified that 

many companies benchmark to such indices for 

investment purposes and thus will not purchase 

bonds that are index ineligible and not rated by 

particular NRSROs.77

Market participants and academics have identified 

various other barriers to entry in the credit rating 

industry, including economic and regulatory 

barriers.78 For instance, when the Commission 

proposed new rules and rule amendments (the 

NRSRO Amendments) in accordance with the 

Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act)79 commenters 

expressed concerns that certain of the proposed 
STAFF REPORT | 39

requirements would be burdensome for smaller 

NRSROs to implement and could raise barriers to 

entry for credit rating agencies to seek to register as 

NRSROs.80 In connection with the adoption of the 

NRSRO Amendments, the Commission acknowledged that, despite efforts to limit the impact on 

small entities, the Dodd-Frank Act contained 

requirements, including those implemented by the 

NRSRO Amendments, which impose costs on 

NRSROs and may consequently create barriers to 

entry and have negative impacts on competition.81

At the same time, the Commission recognized 

substantial benefits associated with the NRSRO 

Amendments implementing Title IX, Subtitle C of 

the Dodd-Frank Act, which was designed to address 

the causes of certain market failures that may 

impair the integrity and transparency of NRSRO 

credit ratings.82 For instance, certain provisions of 

the NRSRO Amendments were designed primarily 

to enhance the integrity of how NRSROs determine 

credit ratings by improving internal governance 

of NRSROs, managing potential principal-agent 

problems and conflicts of interest in the credit 

rating process, and promoting adherence to the 

procedures and methodologies for determining 

80 See 2014 Adopting Release, 79 FR 55078 (Sept. 15, 2014) at 55090, 55154, 55161, and 55254-55, available at https://

www.govinfo.gov/content/pkg/FR-2014-09-15/pdf/2014-20890.pdf, see also comment letters received with respect to the 

NRSRO Amendments as proposed, available at https://www.sec.gov/comments/s7-18-11/s71811.shtml.

81 See 2014 Adopting Release, 79 FR at 55254.

82 See id. at 55091; see also Section 931 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 

111-203, 124 Stat. 1376, H.R. 4173 (July 21, 2010) (articulating the findings of Congress, including that the activities and 

performance of credit rating agencies are matters of national public interest and that certain market failures necessitate 

increased accountability on the part of credit rating agencies).

83 See 2014 Adopting Release, 79 FR at 55091.

84 See id.

85 See Section IV.C of the December 2015 Annual Report, available at https://www.sec.gov/ocr/reportspubs/annualreports/2015-annual-report-on-nrsros.pdf.

86 For example, KBRA was granted a temporary conditional exemption from Rule 17g-5(c)(1), which prohibits an NRSRO 

from issuing or maintaining a credit rating solicited by a person that, in the most recently ended fiscal year, provided the 

NRSRO with net revenue equaling or exceeding 10% of the total net revenue of the NRSRO for the fiscal year. In another 

example, the Commission granted JCR a temporary, conditional exemption from certain requirements of Section 15E(t), 

which include provisions regarding the composition and duties of the board of directors of an NRSRO. The Commission’s 

orders granting exemption requests can be found under “Exemption Orders” in the “Commission Orders” section of the 

OCR webpage, available at https://www.sec.gov/about/divisions-offices/office-credit-ratings/commission-orders.

credit ratings.83 Other provisions of the NRSRO 

Amendments were designed mainly to enhance the 

transparency of NRSRO credit ratings by increasing 

disclosure and reducing information asymmetries 

that may adversely affect users of credit ratings.84

The NRSRO Amendments as adopted by the 

Commission include various changes from the 

proposed amendments intended to address 

concerns regarding barriers to entry, including 

standards allowing NRSROs to tailor particular 

requirements to their business models, size, and 

rating methodologies.85

Additionally, there are provisions for exemptions 

built into several rules and statutory provisions if 

the Commission deems that these requirements may 

impose an unreasonable burden on the NRSRO. 

NRSROs may also request exemptions under 

Section 36 to Exchange Act rules or provisions.86

B. TRANSPARENCY

Congress described the Rating Agency Act as an 

act to improve ratings quality for the protection of 

investors and in the public interest “by fostering 

accountability, transparency, and competition in 
40 | OFFICE OF CREDIT RATINGS

the credit rating agency industry.”87 Section 932 

of the Dodd-Frank Act is entitled “Enhanced 

regulation, accountability, and transparency of 

NRSROs.” Both acts contain various provisions 

designed to increase the transparency—through 

clear disclosure open to public scrutiny—of, among 

other things, NRSROs’ credit rating procedures 

and methodologies, business practices, and credit 

ratings performance. 

Under Exchange Act rules, NRSROs are required 

to disclose:

■ Standardized performance statistics;88

■ Consolidated information about credit rating 

histories;89

■ Information about material changes and 

significant errors in the procedures and 

methodologies used to determine credit 

ratings;90

■ Information about specific rating actions;91 and 

■ Clear definitions of each symbol, number, or 

score in the rating scale used by the NRSRO.92

NRSROs must also disclose certain information in 

connection with each rating action.93 Such information includes, among other things, the version of 

the procedure or methodology used to determine 

the credit rating, a description of the types of data 

that were relied upon for purposes of determining 

87 See the preamble to the Rating Agency Act.

88 See Instructions for Exhibit 1 to Form NRSRO. 

89 See Rule 17g-7(b). 

90 See Rule 17g-8(a)(4). 

91 See Rule 17g-7(a). 

92 See Rule 17g-8(b)(2).

93 See Rule 17g-7(a). 

94 See Rule 17g-7(a)(1)(ii). 

95 The reports accompanying a rating action are frequently available on a paid subscription basis, although some NRSROs 

provide access to such reports at no cost.

96 Further transparency may be realized if NRSROs seek public comment for proposed new or changed methodologies. Rule 

17g-8(d)(1)(ii) provides that NRSROs must consider implementing controls reasonably designed to ensure that new or 

updated methodologies are disclosed to the public for consultation prior to their being employed.

the credit rating, an assessment of the quality of 

information available and considered in determining the credit rating, and information on the 

sensitivity of the credit ratings to assumptions made 

by the NRSRO.94

In addition to or in connection with required 

disclosures, NRSROs often issue press releases and 

reports at the time of a rating action to describe 

the rationale behind such rating action, and 

make versions of methodologies for determining 

credit ratings available on their websites.95 The 

availability of underlying methodologies, together 

with a report discussing the analysis supporting 

the rating action, may provide additional 

transparency into an NRSRO’s credit analysis and 

credit rating process.

From time-to-time, NRSROs also publish revisions 

and updates to their methodologies. They may 

also at times publish revisions to the assumptions 

that are inputs to their methodologies and rating 

approaches, including changes to their economic 

outlooks or default rate assumptions. Revised 

methodologies and related assumptions may 

provide additional transparency into changes in the 

NRSROs’ credit views and analyses.96

NRSROs may also provide transparency to the 

extent they publish commentaries or research. 
STAFF REPORT | 41

NRSROs publish commentaries and research 

that generally include data, analyses, or projections on market sectors and economic outlooks.97

These publications may be helpful to investors 

to understand industry trends and the NRSROs’ 

credit views.

For example, following the failure of Silicon Valley 

Bank and other regional banks, NRSROs published 

commentaries and research that provided their 

credit perspectives on banks and the banking 

system more generally. They also published U.S. 

bank-related commentaries on economic and 

market trends. KBRA published a report examining 

the loan portfolios of U.S. community and regional 

banks, noting that bank earnings in this sector have 

decreased due to net interest margin compression.98

A DBRS report noted that U.S. banks performed 

well in the second quarter of 2023, with deposit 

outflows having stabilized while asset quality and 

capital metrics remained very strong, and that it 

does not expect a significant amount of changes to 

its bank ratings in the near term.99

NRSROs have continued publishing commentaries 

regarding their credit views on the application 

and utilization of so-called decentralized finance. 

97 NRSROs may also make market and economic data separately available.

98 See KBRA, U.S. Community and Regional Bank Loan Portfolio Evolution and Performance: Historical Perspective and 

Context (Aug 29, 2023), available at https://www.kbra.com/publications/DMrRSrhS/u-s-community-and-regional-bankloan-portfolio-evolution-and-performance-historical-perspective-and-context?format=file.

99 See DBRS, U.S. Banks 2Q23: Steady Results in an Unusual Environment; Asset Quality Deterioration Risks Remain (Jul 

27, 2023), available at https://www.dbrsmorningstar.com/research/417746/us-banks-2q23-steady-results-in-an-unusualenvironment-asset-quality-deterioration-risks-remain.

100 See Fitch Ratings, Primer on DeFi: Risks and Regulations (Feb 15, 2022), available at https://www.fitchratings.com/

research/banks/primer-on-defi-risks-regulations-15-02-2022.

101 See Moody’s, Blockchain offers prospects for efficiencies, financial benefits in public finance (Mar 23, 2023), available at 

https://www.moodys.com/research/Local-Government-US-Blockchain-offers-prospects-for-efficiencies-financial-benefitsSector-In-Depth--PBC_1356311.

102 See S&P, How DeFi’s Operational Risks Could Influence Credit Quality (Jun 7, 2023), available at https://www.spglobal.

com/_assets/documents/ratings/research/101578108.pdf.

103 See DBRS, Modern Office Buildings Built Since 2000 May Benefit as About $11.5 billion in Loans Mature Through 2024

(Sep 20, 2023), available at https://www.dbrsmorningstar.com/research/420839/modern-office-buildings-built-since-2000-

may-benefit-as-about-dollar115-billion-in-loans-mature-through-2024.

Fitch cited cybersecurity and software risks, 

market and liquidity risks, and legal certainty, 

among other factors, as considerations for current 

and prospective rated issuers’ exposure to crypto 

assets and so-called decentralized finance.100 The 

application of blockchain-based platforms by 

municipal bond offerings were viewed by Moody’s 

as enhancing transparency and auditability and 

offering potential cost benefits, but also introducing 

cyber and regulatory risks.101 S&P published 

research presenting its view on certain operational 

risks that could influence the credit quality of 

issuers exposed to the sector, such as onboarding 

risk, bridge and transfer risk, and storage risk.102

NRSROs have also provided their views on 

commercial real estate (CRE) related credit risks. 

For example, DBRS published a report noting 

that commercial mortgage-backed securities loans 

backed by office properties have suffered due to 

a prolonged post-pandemic return to office and 

corporate cost-cutting, but that factors including 

property age, rolling leases, and location affect loan 

performance.103 In a research report, KBRA found 

that rising interest rates have contributed to a rise 

in commercial mortgage-backed securities loan 

delinquencies and special servicing volumes that it 
42 | OFFICE OF CREDIT RATINGS

anticipates will continue in the short term, although 

CRE performance will vary between and within 

metropolitan areas.104 Fitch noted that commercial 

mortgage-backed securities’ exposure to lower 

quality offices in 2023, especially those with 

significant upcoming rollover and located in high 

vacancy submarkets, has been a key determinant of 

negative rating actions.105

Several of the Staff’s findings and recommendations 

in connection with the 2023 Section 15E examinations related to transparency issues. These findings 

included disclosure and reporting issues implicating 

Rule 17g-7(a), Rule 17g-7(b), and Form NRSRO. 

A description of these findings can be found in 

Section III.D.3 of this report.

C. CONFLICTS OF INTEREST

NRSROs operate under one or more business 

models, each having conflicts of interest. The 

primary business model of the NRSROs is the 

“issuer-pay” model, which is subject to a conflict 

in that the credit rating agency may be influenced 

to determine more favorable (i.e., higher) ratings 

than warranted in order to retain the obligors or 

issuers as clients. Another business model is the 

“subscriber-pay” model, under which investors 

pay a subscription fee to access an NRSRO’s 

ratings. This model is also subject to conflicts of 

interests. For example, an NRSRO may be aware 

that an influential subscriber holds a securities 

position (long or short) that could be advantaged 

104 See KBRA, Metro-Level CRE Loan Distress: Location Still Matters (Sep 11, 2023), available at https://www.kbra.com/

publications/HkFKXhBh/metro-level-cre-loan-distress-location-still-matters?format=file.

105 See Fitch Ratings, U.S. Office CRE Performance to Worsen Amid Rising Market Pressures (Jul 12, 2023) available 

at https://www.fitchratings.com/research/structured-finance/us-office-cre-performance-to-worsen-amid-rising-marketpressures-12-07-2023.

106 See, e.g., Section 15E(h) and Rule 17g-5. 

107 See Rule 17g-5(c).

if a credit rating upgrade or downgrade causes the 

market value of the security to increase or decrease 

or that a subscriber invests in newly issued bonds 

and may obtain higher yields if the bonds were to 

have lower ratings. 

In addition to being paid by issuers and subscribers, 

some NRSROs are paid to determine ratings by 

investors. Frequently these engagements contemplate the issuance of the credit rating on a private 

basis. In these cases, the NRSRO provides the 

credit rating directly to its client but does not 

publish (or make available to all its subscribers) 

the credit rating or a report detailing its credit 

analysis (although such a report may be provided 

to the client with the rating). This business model is 

subject to conflicts of interest, which are dependent 

on the objectives of the client for obtaining the 

rating. For example, an NRSRO may be aware that 

an investor client intends to use a credit rating to 

establish regulatory capital requirements and could 

benefit from receiving a higher credit rating on an 

investment it holds.

Section 15E and the related Commission rules 

address conflicts of interest.106 For example, Rule 

17g-5 identifies certain conflicts of interest that are 

prohibited under all circumstances107 and other 

conflicts of interest that are prohibited unless an 

NRSRO has publicly disclosed the existence of the 

conflict and has implemented policies and proce-
STAFF REPORT | 43

dures reasonably designed to address and manage 

such conflict.108

Among the conflicts of interest identified in Rule 

17g-5 are conflicts involving individual credit 

analysts or other employees of an NRSRO. For 

example, an NRSRO is prohibited from issuing or 

maintaining a credit rating where an employee of 

the NRSRO that participated in determining, or is 

responsible for approving, the credit rating directly 

owns securities of, or is an officer or director of, the 

person that would be subject to the credit rating.109

Rule 17g-5(c)(8) is another example of a prohibited 

conflict of interest involving persons within an 

NRSRO. Under the rule, an NRSRO is prohibited 

from issuing or maintaining a credit rating where 

a person within the NRSRO who participates in 

determining or monitoring the rating, or developing 

or approving procedures or methodologies used 

for determining the rating, also (i) participates in 

sales or marketing activities of the NRSRO or its 

affiliate, or (ii) is influenced by sales or marketing 

considerations.110 Other statutory provisions and 

Commission rules address conflicts of interest that 

may arise when a credit analyst seeks employment 

outside the NRSRO. Section 15E(h)(4) requires 

108 See Rule 17g-5(a)(1)-(2) and Rule 17g-5(b); Instructions for Exhibits 6 and 7 to Form NRSRO. In addition, Section 15E(t)

(3)(B) requires an NRSRO’s board of directors to oversee the establishment, maintenance, and enforcement of policies and 

procedures to address, manage, and disclose any conflicts of interest.

109 See Rule 17g-5(c)(2) and Rule 17g-5(c)(4).

110 See Rule 17g-5(c)(8).

111 See Section 15E(h)(4)(A).

112 See Rule 17g-8(c). 

each NRSRO to have policies and procedures in 

place to provide for an internal “look-back” review 

process in order to determine whether any conflict 

of interest of a former employee influenced a credit 

rating in certain instances.111 Rule 17g-8(c) requires 

an NRSRO’s policies and procedures to address 

instances in which a “look-back” review determined that a conflict of interest influenced a credit 

rating. Such policies and procedures are required to 

be reasonably designed to ensure that the NRSRO 

will promptly determine whether a credit rating 

must be revised and promptly publish a revised 

credit rating or an affirmation of the credit rating, 

along with certain disclosures about the existence 

of the conflict.112

A number of the Staff’s findings and recommendations in connection with the 2023 Section 15E 

examinations related to conflict of interest issues. 

Among other things, these findings identified 

certain instances of lack of separation between 

commercial activities and rating determinations 

and weaknesses related to policies and procedures 

to address and manage conflicts of interest. A 

description of these findings and the related recommendations of the Staff can be found in Section 

III.D.3 of this report.
44 | OFFICE OF CREDIT RATINGS
STAFF REPORT | 45

V. ACTIVITIES RELATING TO NRSROs

113 Available at https://www.sec.gov/files/litigation/admin/2023/34-98636.pdf. 

114 Available at https://www.sec.gov/files/litigation/admin/2023/34-98638.pdf. 

115 Available at https://www.sec.gov/files/litigation/admin/2023/34-98654.pdf. 

116 Available at https://www.sec.gov/files/rules/other/2023/34-98590.pdf. 

A. COMMISSION ORDERS AND 

RELEASES

T

he Commission issued the following 

orders and releases relating to NRSROs or 

credit ratings in general in calendar year 

2023:

■ In re DBRS, Inc., Release No. 34-98636 (Sept. 

29, 2023).113 The Commission instituted settled 

administrative and cease-and-desist proceedings 

against DBRS finding violations of Exchange 

Act Section 15E(c)(3)(A) and Rules 17g-7(a)

(1)(ii)(B) and 17g-8(a)(1) and (2). The order 

finds that DBRS had an ineffective internal 

control structure governing implementation of 

and adherence to its published procedures and 

methodologies for determining credit ratings 

for certain multi-borrower CMBS transactions. 

Specifically, DBRS made systematic adjustments 

to credit enhancement levels implied by its 

quantitative predictive model in a manner 

not guided or described by DBRS’s published 

procedures and methodologies. The order also 

finds that DBRS failed to accurately identify 

the rating methodology it used to rate certain 

single-asset/single-borrower CMBS transactions 

and failed to enforce its policies and procedures 

requiring credit ratings to be determined and 

issued based on approved methodologies.

■ In re DBRS, Inc., Release No. 34-98638 

(Sept. 29, 2023).114 The Commission instituted 

settled administrative and cease-and-desist 

proceedings against DBRS finding violations 

of Exchange Act Section 17(a)(1) and Rule 

17g-2(b)(7). The violations were in connection 

with DBRS’s failure to retain employee text 

messages that included discussions of initiating 

or determining credit ratings.

■ In re Kroll Bond Rating Agency, LLC, 

Release No. 34-98654 (Sept. 29, 2023).115 The 

Commission instituted settled administrative 

and cease-and-desist proceedings against KBRA 

finding violations of Exchange Act Section 

17(a)(1) and Rule 17g-2(b)(7). The violations 

were in connection with KBRA’s failure to retain 

employee text messages that included discussions of initiating, determining, maintaining, 

changing, or withdrawing credit ratings.

■ Order Granting Temporary Conditional 

Exemption for Japan Credit Rating Agency, 

Ltd. From Certain 15E(t) Requirements of the 

Securities Exchange Act of 1934, Release No. 

34-98590 (Sept. 28, 2023).116 On September 

28, 2023, the Commission granted JCR a 

temporary, conditional exemption from certain 

corporate governance requirements under 

Exchange Act Section 15E(t). The exemption 

expires on October 30, 2026.
46 | OFFICE OF CREDIT RATINGS

■ Removal of References to Credit Ratings From

Regulation M, Release No. 34-97657 (June 7, 

2023), 88 FR 39962 (June 20, 2023).117 The 

Commission adopted rule changes to remove 

and replace references to credit ratings from 

existing exceptions provided in Rule 101 

and Rule 102 of Regulation M, a set of rules 

that prohibits activities that could artificially 

influence the market for an offered security.

117 Available at https://www.sec.gov/files/rules/final/2023/34-97657.pdf. 

118 Available at https://www.sec.gov/files/2023-ocr-staff-report.pdf. 

B. STAFF PUBLICATION

The Staff issued the following publication relating 

to NRSROs or credit ratings in general in calendar 

year 2023:

■ Staff Report on Nationally Recognized 

Statistical Rating Organizations, dated February 

2023 (the 2022 Staff Report), as required 

by Section 6 of the Rating Agency Act and 

Section 15E(p)(3)(C).118 The 2022 Staff Report 

addresses the matters described in the second 

paragraph under Section II of this Report for the 

period January 1, 2022, through December 31, 

2022, and summarizes the essential findings of 

the examinations conducted by the Staff under 

Section 15E(p)(3)(C) for the review period 

January 1, 2021, to December 31, 2021.
STAFF REPORT | 47

VI. APPENDIX: 

SUMMARY OF STATUTORY 

FRAMEWORK AND RULES

119 Pub. L. No. 109-291, 120 Stat. 1327 (2006).

120 Pub. L. No. 111-203, § 932, 124 Stat. 1376, 1872-83 (2010).

121 See Section 15E(p)(2) for a description of OCR staffing requirements.

122 Section 15E(b)(2) and Rule 17g-1(f).

123 Section 15E(b)(1) and Rule 17g-1(e).

124 Section 15E(a)(3) and Rule 17g-1(i).

125 Section 15E(a)(1)(B)(i) and Section 15E(a)(1)(B)(ii).

126 Section 15E(c)(3)(A). 

127 Rule 17g-2(b)(12).

S

ection 15E and Rules 17g-1 through 17g-10 

govern the registration and oversight 

program for credit rating agencies that are 

registered with the Commission as NRSROs. 

This regulatory regime was established by the 

Rating Agency Act119 and amended by the DoddFrank Act.120

The Dodd-Frank Act mandated the creation of the 

Office of Credit Ratings (OCR), which is responsible for oversight of credit rating agencies registered 

with the Commission as NRSROs. OCR’s Staff 

includes professionals with expertise in a variety of 

areas that relate to its regulatory mission, such as 

corporate, municipal, and structured debt finance.121

Pursuant to the Commission’s regulatory regime 

for NRSROs, an NRSRO is required to, among 

other things:

■ File with the Commission an annual certification 

of its Form NRSRO registration,122 promptly 

update its filing in certain circumstances,123 and 

make its current Form NRSRO filing and most 

of its current Form NRSRO Exhibits available 

on its public website.124

■ Disclose certain information, including information concerning the NRSRO’s performance 

measurement statistics and its procedures and 

methodologies to determine ratings.125

■ Establish, maintain, enforce, and document an 

effective internal control structure governing the 

implementation of and adherence to policies, 

procedures, and methodologies for determining 

credit ratings,126 and retain records of its internal 

control structure.127

■ Consider certain factors with respect to its 

establishment, maintenance, enforcement, and 
48 | OFFICE OF CREDIT RATINGS

128 See, e.g., Rule 17g-8(d)(1)–(4). 

129 See, e.g., Rule 17g-8(a)(2)–(5). 

130 Rule 17g-3(a)(7)(i).

131 Rule 17g-3(b)(2).

132 Rule 17g-8(b)(1).

133 Rule 17g-8(b)(3).

134 Rule 17g-7(a).

documentation of an effective internal control 

structure.128

■ Establish, maintain, enforce, and document 

policies and procedures reasonably designed 

to achieve certain objectives concerning its 

development and application of, and disclosures 

related to, methodologies and models.129

■ File an unaudited report containing an 

assessment by management of the effectiveness 

during the fiscal year of the NRSRO’s internal 

control structure governing the implementation of and adherence to policies, procedures, 

and methodologies for determining credit 

ratings.130 The report must be accompanied 

by a signed statement by the NRSRO’s chief 

executive officer or an individual performing 

similar functions.131

■ Establish, maintain, enforce, and document 

policies and procedures that are reasonably 

designed to: assess the probability that an issuer 

of a security or money market instrument will 

default or fail to make required payments to 

investors,132 and ensure that it applies any rating 

symbol, number, or score in a manner that is 

consistent for all types of obligors, securities, 

and money market instruments for which the 

symbol, number, or score is used.133

■ Publish an information disclosure form when 

taking a rating action with respect to a rating 

assigned to an obligor, security, or moneymarket instrument in a class for which it is 

registered as an NRSRO.134 The information 

form must disclose certain information with 
STAFF REPORT | 49

respect to the particular rating action.135

In addition, the NRSRO must attach to 

the information disclosure form a signed 

statement by a person within the NRSRO with 

responsibility for the rating action.136

■ Make and retain, or retain, certain records, 

including a record documenting its established 

procedures and methodologies used to 

determine credit ratings137 and records related 

to its ratings.138 An NRSRO must promptly 

furnish to the Commission or its representatives 

copies of required records, including English 

translations of those records, upon request.139

■ Establish, maintain, and enforce written policies 

and procedures reasonably designed to prevent 

the misuse of material non-public information 

(MNPI), including the inappropriate 

dissemination of MNPI both within and 

outside the NRSRO, the inappropriate trading 

of securities using MNPI by a person within the 

NRSRO, and the inappropriate dissemination 

of pending credit rating actions within and 

outside the NRSRO before issuing the rating 

on the Internet or through another readily 

accessible means.140

135 Rule 17g-7(a)(1)(ii)(A)-(N) specifies the information that must be disclosed in the information disclosure form.

136 Rule 17g-7(a)(1)(iii).

137 Rule 17g-2(a)(6).

138 The records that an NRSRO must make and retain, or retain, with respect to its ratings include the identity of certain 

persons who participated in determining or approving the rating, records used to form the basis of a rating, external and 

internal communications received or sent by the NRSRO and its employees related to a rating, and for ABS ratings, a 

record of the rationale for any material difference between the final rating assigned and the rating implied by a quantitative 

model that was a substantial component in determining the rating. Rule 17g-2(a)(2)(i), (ii), and (iii); Rule 17g-2(b)(2) and 

(b)(7).

139 Section 15E(a) and (b) and Rule 17g-2(f).

140 Section 15E(g) and Rule 17g-4.

141 Section 15E(h) and Rule 17g-5. See also Section IV.C of this Report.

142 Rule 17g-5(c). See also Section IV.C of this Report.

143 Rule 17g-5(a)(1) and (a)(2); Rule 17g-5(b).

144 Rule 17g-6.

145 Section 15E(a)(1)(B)(v).

146 Section 15E(j)(3).

■ Establish, maintain, and enforce written 

policies and procedures reasonably designed 

to address and manage conflicts of interest.141

Certain conflicts of interest are expressly 

prohibited,142 and for other types of conflicts of 

interest, the NRSRO must disclose the conflicts 

and have policies and procedures in place to 

manage them.143

■ Refrain from engaging in specified unfair, 

coercive, or abusive practices.144

■ Provide information on whether it has in effect a 

code of ethics, and if not, the reasons it does not 

have a code of ethics.145

■ Establish procedures for the receipt, retention, 

and treatment of complaints regarding 

credit ratings, models, methodologies, and 

compliance with the securities laws and its 

policies and procedures developed under 

this regulatory regime, and of confidential, 

anonymous complaints.146

■ Designate a compliance officer (the DCO) 

responsible for administering policies and 

procedures related to MNPI and conflicts 

of interest, ensuring compliance with the 

securities laws and regulations, and establishing 

procedures for handling complaints by 
50 | OFFICE OF CREDIT RATINGS

employees or users of credit ratings.147 The DCO 

must submit an annual report to the NRSRO 

on the compliance of the NRSRO with the 

securities laws and the NRSRO’s policies and 

procedures, and the NRSRO must file the report 

with the Commission.148

■ Have a board of directors or similar governing 

body (collectively, the Board), certain of 

whose members must be independent from 

the NRSRO.149 An NRSRO’s Board, or 

members thereof, are responsible for exercising 

oversight of specified subjects related to the 

NRSRO’s rating business and for approving 

the procedures and methodologies, including 

147 Section 15E(j)(1) and (3).

148 Section 15E(j)(5).

149 Section 15E(t)(2).

150 Section 15E(t)(3) and Rule 17g-8(a)(1).

151 Rule 17g-9.

152 Section 15E(h)(4) and (5); Rule 17g-8(c).

qualitative and quantitative data and models, 

that the NRSRO uses to determine ratings.150

■ Establish, maintain, enforce, and document 

standards of training, experience, and 

competence for the individuals it employs 

to participate in the determination of credit 

ratings that are reasonably designed to achieve 

the objective that the NRSRO produces 

accurate credit ratings, and retain a record of 

these standards.151

■ Establish policies and procedures regarding 

post-employment activities of certain former 

personnel.152

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