Staff Report

FEBRUARY | 2023

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.
S TAFF 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

D. 2022 Section 15E(p)(3) Examinations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

1. Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

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 2021 Section 15E Examinations. . . . . . . . . . 17

IV. STATE OF COMPETITION, TRANSPARENCY, AND CONFLICTS OF INTEREST . . . . . . . . . . 19

A. Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

1. Select NRSRO Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

2. Market Share Observations in the Asset-Backed Securities Rating Category. . . . . . . . 29

3. Barriers to Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

B. Transparency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

C. Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

V. ACTIVITIES RELATING TO NRSROs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

A. Commission Orders and Releases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

B. Court Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

C. Staff Publication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

VI. APPENDIX: SUMMARY OF STATUTORY FRAMEWORK AND RULES. . . . . . . . . . . . . . . . 43
ii | OFFICE OF CREDIT RATINGS

CHARTS

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

Chart 2. Number of Outstanding Credit Ratings as of December 31, 2021 by 

Rating Category. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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

December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Chart 5. Breakdown of Ratings Reported Outstanding by NRSRO 

as of December 31, 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Chart 6. Breakdown of Non-Government Securities Ratings Reported 

Outstanding by NRSRO as of December 31, 2021. . . . . . . . . . . . . . . . . . . .23

Chart 7. Breakdown of Government Securities Ratings Reported 

Outstanding on December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Chart 8. Total Non-Government Ratings Issued by All NRSROs as of 

December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

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

NRSROs as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Chart 10. Total ABS Ratings Issued by All NRSROs as of December 31, 2021. . . . . . . . . .26

Chart 11. NRSRO Credit Analysts and Credit Analyst Supervisors. . . . . . . . . . . . . . . .26

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

Reported Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

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

Issued in 2020, 2021, and First Half of 2022 . . . . . . . . . . . . . . . . . . . . . . 30

Chart 14. Rating Agency Market Shares for U.S. Conduit CMBS Issued in 2020, 

2021, and First Half of 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

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

Issued in 2020, 2021, and First Half of 2022 . . . . . . . . . . . . . . . . . . . . . . 31

Chart 16. Rating Agency Market Shares for Agency CMBS Issued in 2020, 2021, and 

First Half of 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Chart 17. Rating Agency Market Shares for U.S. ABS Issued in 2020, 2021, and 

First Half of 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

Chart 18. Rating Agency Market Shares for U.S. MBS Issued in 2020, 2021, and 

First Half of 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

Chart 19. Rating Agency Market Shares for U.S. CLOs Issued in 2020, 2021, and 

First Half of 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
S TAFF 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/ocr/ocr-reports-and-studies.html.

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. The 2021 

Staff Report on NRSROs was the first to present in a single report 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
S TAFF 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. 

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, 2022, 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
4 | OFFICE OF CREDIT RATINGS

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.

8 Collectively, the three large NRSROs account for approximately 93.2% of the aggregate revenue reported by all

NRSROs for the 2021 fiscal year in accordance with Rule 17g-3(a)(3); the three medium NRSROs collectively account 

for approximately 5.6% of such aggregate revenue; and the three small NRSROs collectively account for approximately 

1.1% of such aggregate revenue. See infra Section IV.A.1.c, Chart 12. Based on information provided in its application 

for registration, Demotech would be characterized as a small NRSRO for purposes of this Report. However, because 

Demotech was not registered as an NRSRO for the entirety of calendar year 2022, it is generally not discussed in the 

portions of this Report that use this term. References to small NRSROs in this Report do not include Demotech.

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.

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 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 

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

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 
S TAFF REPORT | 5

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. 

In calendar year 2022, one application for initial 

registration as an NRSRO in the insurance 

companies ratings class was filed with the 

Commission by Demotech. The Commission 

granted Demotech’s registration as an NRSRO in 

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).

13 See Order Granting Registration of Demotech, Inc. as a Nationally Recognized Statistical Rating Organization, SEC Rel. 

No. 34-95243 (July 11, 2022), available at: https://www.sec.gov/rules/other/2022/34-95243.pdf.

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

such ratings class on July 11, 2022.13 No applications for registration by a current NRSRO in 

additional rating categories were filed with the 

Commission in calendar year 2022.

The SEC oversees and, as discussed below, 

examines NRSROs. The Commission is prohibited 

by statute, however, from regulating the substance 

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

ratings.14 Methodologies include, among other 

things, the quantitative and qualitative models used 

to determine credit ratings.

S TAFF REPORT | 7

III. EXAMINATIONS AND MONITORING

15 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.15 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 conducted 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 2021 and concluded in late September 2022 

(2022 Section 15E examinations).

B. RISK ASSESSMENT

The 2022 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 2022 Section 15E examinations, which 

focuses primarily on new and emerging issues, 

OCR 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:

■ Surveillance Practices in Times of Stress:

Rating surveillance processes came under stress 

during COVID-19 due to rapidly changing 

information and declining performance in some 

sectors, which may have required additional 

surveillance reviews. The Staff identified as 

potential risks: the possibility that increased 

analyst workloads could result in failures to 

adhere to applicable surveillance policies and 

procedures; and the possibility that NRSROs 

may have adjusted assumptions or streamlined 

surveillance processes without sufficient 

controls to ensure appropriate documentation 

and disclosure.

■ Impact of Pandemic on Commercial Real 

Estate: After being adversely affected by 

COVID-19, the single borrower CMBS sector 

experienced an uneven recovery during the 

first half of 2021 as compared to the first half 

16 Examples of such ESG products and services include: evaluations of the environmental benefits of a project financed with

the proceeds of a “green” bond issuance; ESG scores based on the expected impact of ESG factors on a company’s growth, 

profitability, capital efficiency, and risk exposure; and assessments of a company’s risk from climate-related scenarios.

of 2020, with properties such as lodging and 

retail lagging. The Staff identified potential 

risks relating to commercial real estate ratings 

with significant exposure to sectors negatively 

impacted by COVID-19, and potential 

non-adherence to methodologies and rating 

processes with respect to: (1) qualitative 

adjustments made to model implied ratings, 

model implied subordination levels, and inputs 

to models used in the ratings process; (2) 

property valuations; and, (3) default frequency 

and severity assumptions or projections.

■ Changing Methods of Communication/

Technology: The Staff identified as a potential 

risk, given the increased use of text messaging 

applications as a means of communication, 

an increased likelihood that business 

communications are conducted through 

unapproved means and/or that appropriate 

records are not retained.

■ Securities Ownership: In light of specific findings 

and recommendations in the 2021 Section 15E 

examinations, the Staff identified as a potential 

risk for consideration by all examination teams 

that NRSROs may have weaknesses in their 

policies and procedures to manage conflicts of 

interest or prevent inappropriate use of material 

non-public information with respect to securities 

ownership by employees.

■ ESG Factors and Products: NRSROs have 

developed ESG methodologies applicable to 

the determination of credit ratings. In addition, 

NRSROs and their affiliates continue to develop 

and offer an increasing number of ESG-related 

products and services that are not credit ratings 

and therefore are not directly regulated by the 

Commission.16 Potential risks identified by the 

Staff include the possibility that the marketing 

and development of stand-alone ESG products 
S TAFF REPORT | 9

may result in conflicts of interest that could 

affect credit ratings.

■ Ratings on Firms Based in China: The Staff 

identified a number of recent developments in 

China that could potentially have significant 

economic consequences. Such developments 

include: a heightened level of concern regarding 

the creditworthiness of large Chinese real estate 

development firms; regional power reductions 

and rationing resulting from fuel shortages, high 

demand, and regulatory imperatives, leading to 

production slowdowns; and substantial losses 

reported at a majority state-owned financial 

company focused on debt management. The 

Staff identified concerns that these developments 

potentially could result in adverse effects on the 

ratings of firms based in China.

C. MONITORING

To help inform its risk assessment process 

and examination program, the Staff in 2022 

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 consisted primarily of 

communications with NRSROs and users of credit 

ratings and reviewing sources such as NRSRO 

publications, news reports, trade publications, 

academic papers, industry conference information, 

and government reports.

For example, the Staff’s discussions covered 

the scope and nature of rating actions that the 

NRSROs attributed to the Russia-Ukraine conflict. 

This included numerous rating actions on entities 

17 On March 15, 2022, the European Union (EU) announced a ban, effective April 15, 2022, on the provision of credit

rating services by EU credit rating agencies, or the provision of access to any subscription services in relation to credit 

rating activities by EU credit rating agencies, to any Russian national or natural person residing in Russia or any legal 

person, entity or body established in Russia. See Ukraine: EU agrees fourth package of restrictive measures against Russia, 

European Commission, March 15, 2022, available at https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1761.

in Russia, Ukraine, and other countries affected 

by the conflict due to rising prices of commodities 

and energy, disruption of business activity within 

Russia and Ukraine, and increased cyber and other 

security risks. It also included the withdrawal of 

ratings subject to sanctions.17 In addition, NRSROs 

reported suspending operations in Russia and 

transferring analytical responsibilities, rating 

information, and network access to offices outside 

of the country.

Another topic of the Staff’s monitoring efforts 

was consideration of the effect of rising interest 

rates and inflation. These developments led some 

NRSROs to lower their global and U.S. economic 

growth forecasts and consider the impact on their 

credit ratings.

The Staff’s monitoring efforts also covered NRSRO 

rating activity related to decentralized finance 

(DeFi), such as distributed ledger technologies, 

crypto assets, and smart contracts. This rating 

activity, although limited, included assessments of 

entities directly engaged in DeFi or crypto assets, 

evaluation of crypto asset holdings by rated entities, 

and ratings of structured finance transactions 

utilizing blockchain.

In 2022, 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 
10 | OFFICE OF CREDIT RATINGS

agencies.18 Each college engaged in periodic discussions during 2022 regarding supervisory activities 

related to the credit rating agencies. The Staff also 

conducted additional discussions with foreign 

regulators, as appropriate. 

D. 2022 SECTION 15E(p)(3) 

EXAMINATIONS

1. Overview

The 2022 Section 15E examinations generally 

focused on the NRSROs’ activities for the period 

covering January 1, 2021 through December 31, 

2021 (the Review Period).19 The examinations also 

reviewed certain activities or credit rating actions 

from outside the Review Period, as appropriate.20

The 2022 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

18 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 OCR 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.

19 Demotech was not registered as an NRSRO during the Review Period and was therefore not the subject of a 2022 Section

15E examination.

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.

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.

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.

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 

anti-fraud provisions of the federal securities 

laws.
S TAFF REPORT | 11

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 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 

findings by each large NRSRO, medium NRSRO, 

and small NRSRO in a random ordering.

a. Large NRSRO #1

The NRSRO did not appear to comply with the 

Section 15E(g)(1) requirement to enforce policies 

and procedures reasonably designed to prevent 

the misuse of material, non-public information. 

Contrary to the NRSRO’s policies and procedures, in several instances analysts used a personal 

messaging application that was not approved by 

the NRSRO to conduct analytical discussions 

pertaining to the determination of a credit rating. 

The Staff recommended that the NRSRO enforce 

its policies and procedures regarding approved 

communication methods 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.

b. Large NRSRO #2

The NRSRO did not promptly provide complete 

records subject to a retention requirement and 

therefore did not appear to comply with Rule 

17g-2(f). The NRSRO did not provide two records 

requested by the Staff in a timely manner, because 

the NRSRO did not conduct an adequate review 

for completeness prior to providing its response. 

The Staff recommended that the NRSRO promptly 

provide complete copies of all relevant documents 

in its productions to the Staff.

c. Large NRSRO #3

The NRSRO did not appear to establish, maintain, 

enforce, and document an effective internal control 

structure governing adherence to policies, procedures, and methodologies for determining credit 

ratings, as required by Section 15E(c)(3)(A). The 

NRSRO did not take a step required in its procedures designed to alert personnel responsible for 

reviewing and validating models that changes had 

been made to a model. As a result, such personnel 

were not aware of a particular change and did not 

conduct a review of that change as required by the 

NRSRO’s procedures, and the NRSRO did not 

detect for approximately two years a model error 

that potentially affected several ratings. The Staff 

recommended that the NRSRO establish, maintain, 

enforce, and document an effective internal control 
12 | OFFICE OF CREDIT RATINGS

structure governing adherence to its policies and 

procedures related to model changes.

d. Medium NRSRO #1

(1) The NRSRO did not appear to establish, 

maintain, enforce, and document policies 

and procedures reasonably designed to assess 

the probability that an issuer of a security 

will default, fail to make timely payment, or 

otherwise not make payments to investors in 

accordance with the terms of the security, as 

required by Rule 17g-8(b)(1). In determining 

a credit rating, the NRSRO excluded from 

the scope of the credit rating certain payment 

obligations under the terms of the security. 

Although disclosed in the accompanying rating 

letter, the exclusion resulted in the NRSRO not 

assessing the likelihood of payment in accordance with the terms of the security and, given 

the Staff’s view that the excluded obligations 

were subject to credit risk, was inconsistent with 

the NRSRO’s general ratings policy and ratings 

scale. The Staff recommended that the NRSRO 

establish, maintain, enforce, and document 

policies and procedures reasonably designed to 

assess the probability that an issuer of a security 

will default, fail to make timely payments, or 

otherwise not make payments to investors in 

accordance with the terms of the security.

The Staff identified such essential finding as a 

material regulatory deficiency.

In its response, the NRSRO stated that, based 

on its analysis of the underlying transaction 

documents and certain other considerations, the 

payment obligations that were excluded from 

the scope of the rating were not subject to credit 

risk. As a result, the NRSRO concluded that 

the approach to the rating was consistent with 

its policies and procedures, including its rating 

scale. The NRSRO indicated a belief that it 

would be inconsistent with the federal securities 

laws to require a credit rating agency to issue 

credit ratings that reflect something other than 

credit risk.

The NRSRO stated that, in response to the 

Staff’s recommendation, it is developing an 

action plan to make enhancements to relevant 

aspects of its compliance program. The NRSRO 

indicated that it will conduct a comprehensive 

review of its relevant procedures and practices 

to identify potential areas of enhancement or 

clarification related to compliance with Rule 

17g-8(b)(1). The NRSRO stated that it would 

enhance controls, procedures, or guidance to 

expressly reflect its current practices designed to 

identify relevant obligations with credit risk and 

confirm that all such obligations are addressed 

by a credit rating. It identified several specific 

processes and practices that may be enhanced. 

The NRSRO also indicated that it would 

expand training opportunities for analytical and 

business development personnel and evaluate 

whether further public disclosure would be 

appropriate and helpful. 

(2) The NRSRO did not appear to comply 

with the Section 15E(g)(1) requirement to 

enforce policies and procedures reasonably 

designed to prevent the misuse of material, 

non-public information. The NRSRO did 

not give a required training covering, among 

other things, the acceptable use of electronic 

communications within the timeframe required 

under its policies. Certain NRSRO personnel 

that did not receive timely training sent 

emails containing confidential information to 

personal email accounts in contravention of 

the NRSRO’s relevant communications policy, 

and the NRSRO did not identify this breach of 

its policy in a timely manner. The Staff recommended that the NRSRO enforce applicable 
S TAFF REPORT | 13

training policies and procedures in the use of 

non-approved email accounts to prevent the 

misuse of material non-public information and 

to consider whether its policies and procedures 

to prevent the misuse of material non-public 

information are reasonably designed to detect 

unauthorized dissemination of material 

non-public information.

(3) The NRSRO’s policies and procedures 

did not appear to be reasonably designed to 

address a conflict of interest that could arise 

from its business, as required by Section 15E(h)

(1). Specifically, the NRSRO did not appear to 

have reasonably designed policies and procedures to prevent it from issuing or maintaining 

credit ratings solicited by a person that provides 

it with net revenue equaling or exceeding 10% 

of its net revenue in a fiscal year, a prohibited 

conflict of interest set forth in Rule 17g-5(c)(1). 

The NRSRO’s processes related to monitoring 

such a conflict of interest are retrospective 

in nature, and therefore would only serve 

to detect a violation after it occurred rather 

than prevent its occurrence. The Staff recommended that the NRSRO establish, maintain, 

and enforce written policies and procedures 

reasonably designed to prevent it from issuing 

or maintaining a credit rating solicited by a 

person who provided the NRSRO with net 

revenue equaling or exceeding 10% of its total 

net revenue in the prior fiscal year. 

(4) The NRSRO published certain information disclosure forms that did not appear to 

be in a format that is easy to use and helpful 

for users of credit ratings to understand the 

information contained therein, as required by 

Rule 17g-7(a)(1)(i)(B). The Staff recommended 

that the NRSRO publish information disclosure 

forms in a format that is easy to use and helpful 

for users of credit ratings to understand the 

information contained in the information 

disclosure forms. 

(5) The NRSRO published information 

disclosure forms that appeared not to adhere 

to the attestation requirements set forth in Rule 

17g-7(a)(1)(iii). The Staff recommended that the 

NRSRO revise its existing procedures so that 

attestations attached to information disclosure 

forms comply with the requirements of the rule. 

e. Medium NRSRO #2

(1) The NRSRO did not appear to enforce an 

internal control governing the implementation 

of and adherence to policies, procedures, and 

methodologies for determining credit ratings, 

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

to its policies and procedures (which require 

documentation of the steps taken in the determination of a credit rating in order to permit 

an after-the-fact review of a credit rating), 

the NRSRO did not identify, on the relevant 

documentation forms, all of the methodologies 

used in the determination of a credit rating. 

Additionally, the NRSRO did not accurately 

record on such forms additional information 

regarding the determination of some credit 

ratings. The Staff recommended that the 

NRSRO prepare the relevant documentation 

forms as required by its policies and procedures.

(2) The NRSRO did not appear to comply 

with the requirement of Rule 17g-7(a)(2) to 

disclose Forms ABS Due Diligence-15E received 

by the NRSRO. In several instances, thirdparty due diligence forms were not attached 

to the corresponding information disclosure 

forms with regard to certain structured finance 

credit ratings. The NRSRO indicated that its 

normal practice for attaching the due diligence 

forms was not successful when the forms were 

password protected. The Staff recommended 
14 | OFFICE OF CREDIT RATINGS

that the NRSRO publish each due diligence 

form it receives in the same manner as the 

related credit rating and that the NRSRO 

establish policies and procedures for publishing 

due diligence forms.

(3) The NRSRO did not appear to disclose 

the versions of procedures and methodologies 

used to determine a credit rating, as required 

by Rule 17g-7(a)(1)(ii)(B). In two instances, 

the Staff observed that a methodology used to 

determine the credit rating was omitted from 

the information disclosure form. In one of 

those instances, an outdated version of another 

methodology was also disclosed. The Staff 

recommended that the NRSRO disclose all 

applicable methodologies used to determine 

a credit rating in the relevant information 

disclosure form. 

f. Medium NRSRO #3

(1) The NRSRO did not appear to establish, 

maintain, and enforce written policies and 

procedures reasonable designed to address 

and manage conflicts of interest that can arise 

from its business, as required by Section 15E(h)

(1). Under the NRSRO’s policies, an analyst 

exposed to fee information may need to be 

recused from voting on credit rating actions for 

that entity for a period of time. In one instance, 

an analyst was directed to recuse himself in 

accordance with the policy, but did not do 

so and improperly participated in two rating 

committees during the time in which he was 

required to be recused. It appeared that the 

relevant policy did not include control elements 

sufficient to ensure that required recusals are 

implemented. The Staff recommended that the 

NRSRO establish procedures or controls as 

necessary to enforce its policy relating to analyst 

exposure to fee information.

(2) In certain circumstances, the NRSRO did 

not appear to provide information disclosure 

forms to the same persons that it provided 

credit ratings, as required by Rule 17g-7(a). In 

connection with privately issued credit ratings, 

the NRSRO created but did not distribute the 

accompanying information disclosure forms. 

The Staff recommended that the NRSRO, when 

taking a rating action, disclose the required 

information disclosure forms to the same 

persons who can receive or access the credit 

rating.

g. Small NRSRO #1

(1) The NRSRO published information 

disclosure forms that did not appear to include 

all the information required to be disclosed 

under Rule 17g-7(a). The Staff observed some 

information disclosure forms with missing 

information. Collectively, these forms omitted 

or included incomplete disclosures regarding 

payment for non-credit rating services, potential 

volatility of the credit rating, the sensitivity 

of the credit rating to assumptions, historical 

performance of the credit rating, and the 

expected probability of default and expected 

loss in the event of default. The Staff recommended that the NRSRO include in its information disclosure forms all disclosures required 

by Rule 17g-7(a).

(2) The NRSRO did not appear to comply 

with Rule 17g-3(a)(5) when filing a non-public 

financial report with the Commission under the 

rule. The NRSRO’s report contained incomplete 

information that did not reflect the applicable 

rule requirements. The Staff recommended that 

the NRSRO include all required information 

in the Rule 17g-3(a)(5) reports it files with the 

Commission.
S TAFF REPORT | 15

(3) The NRSRO did not appear to follow 

Form NRSRO instructions when filing certain 

information with the Commission, resulting in 

incomplete information being filed. The Staff 

recommended that the NRSRO’s Form NRSRO 

filings adhere to the Form NRSRO instructions 

and include all required information.

h. Small NRSRO #2

(1) The NRSRO did not appear to establish, 

maintain, and enforce an effective internal 

control structure governing adherence to 

policies, procedures, and methodologies for 

determining credit ratings, as required by 

Section 15E(c)(3)(A). Specifically, the NRSRO 

did not appear to have effective controls for 

determining a metric specified in the NRSRO’s 

methodology that can impact the rating 

outcome. In two instances observed by the Staff, 

a change made by the NRSRO to the metric 

resulted in a significant upward change to the 

credit rating assigned to the entity, notwithstanding that the same methodology was used 

to determine the credit ratings. The NRSRO’s 

controls did not ensure that the proper metric 

was used when determining credit ratings. The 

Staff recommended that the NRSRO enhance 

its internal controls with respect to its policies, 

procedures, and methodologies pertaining to 

establishing this metric when determining credit 

ratings. The Staff also recommended that the 

NRSRO evaluate the effectiveness of its internal 

controls governing the implementation of and 

adherence to its methodologies for determining 

different types of credit ratings regarding the 

same entity.

The Staff identified such essential finding as a 

material regulatory deficiency.

In its response, the NRSRO stated that it plans 

to require rating committees to approve the 

established metric prior to the determination 

of a credit rating. The NRSRO plans to test 

the effectiveness of the control after it has 

been implemented and to conduct periodic 

reviews to ensure that the NRSRO’s process 

for determining the metric to be used is appropriate. The NRSRO further indicated that it 

has enhanced certain controls pertaining to the 

determination of different types of credit ratings 

regarding the same entity and that it intends 

to make additional changes to its procedures 

and controls to address the findings of an 

independent consultant that it had hired to 

review and evaluate aspects of its credit rating 

process for the different types of ratings.

(2) The NRSRO did not appear to establish, 

maintain, and enforce an effective internal 

control structure governing implementation 

of and adherence to policies, procedures, and 

methodologies for determining credit ratings, as 

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

specifically relates to controls regarding data 

quality, vetting process, and the acquisition of 

information that appeared to be ineffective. 

Although the NRSRO had a process intended 

to gain an understanding of the issuer and 

obligation to be rated, the NRSRO appeared 

not to have engaged in such process in this 

instance and did not appear to have adequate 

controls to ensure that such a process was 

undertaken when appropriate. Another control 

of the NRSRO requires a review to establish 

if data is consistent with analyst expectations. 

This control appeared to be ineffective in identifying apparent inconsistencies between certain 

financial information provided by the issuer 

and other representations made by the issuer. 

Finally, the control afforded by the NRSRO’s 

rating committee appeared to be ineffective 

in ensuring that all material information was 

considered in determining the credit rating. Staff 
16 | OFFICE OF CREDIT RATINGS

recommended that the NRSRO enhance its 

internal controls governing implementation of 

and adherence to its policies, procedures, and 

methodologies for determining credit ratings as 

they pertain to the data quality, vetting process, 

and acquisition of information on issuers.

The Staff identified such essential finding as a 

material regulatory deficiency.

In its response, the NRSRO stated that it will 

review and enhance its procedures for reviewing 

and documenting the information it uses to 

determine credit ratings. Additionally, the 

NRSRO indicated that it will strengthen internal 

controls governing what constitutes a sufficient 

amount of high quality information for its 

ratings to help ensure that it does not issue or 

maintain a credit rating without sufficient access 

to such information. 

(3) The NRSRO produced information 

disclosure forms that did not appear to include 

all the information required to be disclosed 

under Rule 17g-7(a). Specifically, the Staff 

observed some information disclosure forms 

containing a link purporting to provide the 

historical performance disclosure required 

by the rule. Clicking on the link displayed 

an error message rather than the required 

information. The Staff recommended that the 

NRSRO publish information disclosure forms 

containing the required information for all 

rating actions.

(4) The NRSRO did not appear to establish, 

maintain, enforce, and document an effective 

internal control structure governing adherence 

to policies, procedures, and methodologies 

for determining credit ratings, as required 

by Section 15E(c)(3)(A). More specifically, 

the NRSRO did not appear to have effective 

internal controls to ensure that audits of its 

rating files identify whether analysts have 

adhered to the NRSRO’s procedures and 

methodologies for determining credit ratings. 

The controls that are in place may lack independence, given that the person performing the 

audits also acts as a primary rating analyst and 

in certain cases reviews their own work. The 

Staff recommended that the NRSRO ensure 

the independence of reviews and audits so that 

they function as an effective internal control 

governing adherence to the NRSRO’s policies, 

procedures, and methodologies for determining 

credit ratings.

(5) The NRSRO’s policies and procedures 

did not appear to be reasonably designed to 

address and manage conflicts of interest that 

could arise from its business and to prevent 

the misuse of material, non-public information as required by Section 15(h)(1) and 

Section 15E(g)(1), respectively. The apparent 

deficiencies in the NRSRO’s policies and 

procedures relate to the use of shared email 

addresses. The NRSRO’s existing policies and 

procedures do not address access to shared 

email addresses, even though such shared 

email addresses are used by the NRSRO. 

The Staff observed one shared email address 

accessed by both analytical and business 

personnel and another where the extent of 

access was unknown due to an inability of 

the NRSRO to audit such access. In certain 

instances, it appears that analytical personnel 

were exposed to fee information through a 

shared email address, and the use of such 

addresses without appropriate procedures or 

controls creates the possibility of inappropriate interaction between analytical and sales 

personnel or the unauthorized dissemination 

of material non-public information though 

such mailboxes. The Staff recommended that 
S TAFF REPORT | 17

the NRSRO establish, maintain, enforce, and 

document policies and procedures reasonably 

designed to address and manage conflicts of 

interest and prevent the misuse of material 

non-public information with respect to shared 

email addresses.

i. Small NRSRO #3

The NRSRO’s policies and procedures did not 

appear to be reasonably designed to address 

and manage conflicts of interest that could arise 

from its business as required by Section 15E(h)

(1). The policies and procedures in question 

relate to securities holdings of employees, and 

such policies and procedures appeared not 

to prevent the issuance and maintenance of a 

credit rating subject to the prohibited conflict 

of interest set forth in Rule 17g-5(c)(2). The 

NRSRO’s policies and procedures required 

employees with an interest in a rated entity not 

to participate in determining credit ratings of 

that entity. However, the NRSRO discovered 

that an analyst had participated in two rating 

committees while holding securities of a rated 

entity. The Staff recommended that the NRSRO 

establish, maintain, and enforce written policies 

and procedures reasonably designed to address 

and manage conflicts of interest with respect to 

securities holdings.

Additionally, one of the NRSROs appeared not to 

comply with certain requirements in a Commission 

order. The Staff recommended that the NRSRO 

comply with these requirements.

In total the Staff communicated 23 essential 

findings to the NRSROs at the conclusion of the 

2022 Section 15E examinations. Of these essential 

findings: 

23 One of these findings also implicated material, non-public information. This finding is double counted within the list as a

result.

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

■ nine related to disclosure or reporting issues, 

implicating Rule 17g-3, Rule 17g-7(a), and 

Form NRSRO;

■ five related to internal control issues, implicating 

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

■ four related to issues addressing or managing 

conflicts of interest, implicating Section 15E(h)

(1) and Rule 17g-5(c);23

■ three related to issues regarding the prevention 

of misuse of material, non-public information, 

implicating Section 15E(g)(1);24

■ one related to policies and procedures with 

respect to credit rating symbols, numbers, or 

scores, implicating Rule 17g-8(b)(1);

■ one related to the production of records to 

examiners, implicating Rule 17g-2(f); and

■ one related to compliance with a prior 

Commission order. 

4. Responses to Recommendations from 

the 2021 Section 15E Examinations

To assess whether NRSROs appropriately 

addressed findings and recommendations from 

the 2021 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.

During the 2022 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, 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 
18 | OFFICE OF CREDIT RATINGS

may not be able to fully assess the effectiveness 

of these measures during the 2022 Section 15E 

examinations. 

The Staff has determined all findings and recommendations from the 2021 Section 15E examinations have been appropriately addressed, except 

as noted below. NRSROs generally addressed the 

findings and recommendations from the 2021 

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 completed its remedial efforts but that 

such efforts did not appropriately address the corresponding finding and recommendation. In 2021, 

the Staff found that several information disclosure 

forms published by the small NRSRO did not 

appear to include required disclosures regarding the 

source of payment for the credit rating, potential 

volatility of the credit rating, and sensitivity of the 

credit rating to assumptions made by the NRSRO. 

The Staff recommended that the NRSRO ensure 

that its information disclosure forms contain all 

required disclosures. While the Staff observed in the 

2022 examination that the NRSRO made efforts to 

address the previous finding, the Staff determined 

that the NRSRO did not appropriately address the 

2021 finding because the NRSRO’s remediation 

did not address the requirements to disclose the 

potential volatility of the credit rating and the 

sensitivity of the credit rating to assumptions made 

by the NRSRO. 

In another instance, the Staff was unable to 

determine whether its finding and recommendation had been appropriately addressed because 

the NRSRO’s remediation is ongoing and all 

information necessary to assess the remediation is 

not yet available. In 2021, the Staff found that a 

medium NRSRO did not appear to make certain 

disclosures required by Rule 17g-7(a)(1)(ii)(B), 

relating to the version of the NRSRO’s rating 

methodology used for certain rating actions. 

The Staff recommended that the NRSRO ensure 

that it discloses in its information disclosure 

forms the version of the methodology it used to 

determine the credit ratings. The Staff was unable 

to assess remediation in the 2022 examination. 

The NRSRO has indicated it will update all 

relevant disclosure forms on its website to include 

expanded disclosure of methodologies used in 

determining the credit ratings. The NRSRO also 

indicated it would update policies and procedures 

that govern the disclosure of methodologies 

used in determining credit ratings. The NRSRO 

is developing a work plan to address relevant 

updates. The Staff will assess remediation in the 

2023 Section 15E examination. 
S TAFF REPORT | 19

IV. STATE OF COMPETITION, 

TRANSPARENCY, AND CONFLICTS 

OF INTEREST

25 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 the asset-backed securities 

rating category over the past few years. 

26 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 

gained significant ratings share in the asset-backed 

securities category.25

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.26This information, for the calendar year 

ending December 31, 2021, 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 in each rating 

category for which it was registered as of 

December 31, 2021. 

■ 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. 
20 | 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,27 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 assetbacked securities rating category), which provides 

information about ratings issued each year since 

2020, may provide additional insight regarding the 

27 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.

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

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

30 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).

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.28 Also, 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.29

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.30

Chart 2 provides the number of outstanding credit 

ratings reported by each NRSRO in its annual 

certification for the calendar year ending December 

31, 2021, in each of the five rating categories 

identified in Section 3(a)(62)(A) for which the 

NRSRO is registered, as applicable, as well as the 

percentage change in total ratings for each NRSRO 

from 2020 to 2021. 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 
S TAFF REPORT | 21

registered, as reported by each NRSRO in its annual 

certification for the calendar year ending December

31 For example, according to Chart 2, AMB reported that it had 7,286 insurance company credit ratings, and the total of

the credit ratings in that category reported by all NRSROs was 20,962. Therefore, the percentage of NRSRO insurance 

company ratings attributable to AMB was approximately 34.8% (i.e., 7,286 divided by 20,962, expressed as a percentage), 

as shown on Chart 3.

31, 2021, as well as the percentage increase or 

decrease in total ratings from 2020 to 2021.31

Chart 2. Number of Outstanding Credit Ratings as of December 31, 2021 by Rating Category

NRSRO Financial 

Institutions

Insurance 

Companies

Corporate 

Issuers

AssetBacked 

Securities

Government 

Securities

Total 

Ratings

Year-Over-Year Change 

in Total Ratings (2020 

to 2021)

AMB N/R 7,286 977 5 N/R 8,268 0.33%

DBRS 9,704 232 3,254 25,535 22,856 61,581 -0.31%

EJR 5,503 474 8,110 N/R N/R 14,087 -31.06%

Fitch 32,774 3,148 20,711 34,653 177,403 268,689 -0.01%

HR 789 N/R 558 N/R 455 1,802 8.49%

JCR 928 97 3,148 N/R 346 4,519 3.77%

KBRA 1,657 182 455 18,315 9,548 30,157 85.09%

Moody’s 34,003 2,624 33,203 50,815 562,211 682,856 0.70%

S&P 52,947 6,919 56,745 37,593 935,801 1,090,005 1.17%

Total 138,305 20,962 127,161 166,916 1,708,620 2,162,399 1.17%

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

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

Sources: NRSRO annual certifications for the 2020 and 2021 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, 2021

NRSRO Financial 

Institutions

Insurance 

Companies

Corporate 

Issuers

AssetBacked 

Securities

Government 

Securities

Total 

Ratings

Change in % ofTotal 

Ratings from 2020 to 

2021

AMB N/R 34.8% 0.8% <0.1% N/R 0.4% -0.02%

DBRS 7.0% 1.1% 2.6% 15.3% 1.3% 2.8% -0.22%

EJR 4.0% 2.3% 6.4% N/R N/R 0.7% -1.46%

Fitch 23.7% 15.0% 16.3% 20.8% 10.4% 12.4% -0.20%

HR 0.6% N/R 0.4% N/R <0.1% 0.1% 0.03%

JCR 0.7% 0.5% 2.5% N/R <0.1% 0.2% 0.03%

KBRA 1.2% 0.9% 0.4% 11.0% 0.6% 1.4% 0.94%

Moody’s 24.6% 12.5% 26.1% 30.4% 32.9% 31.6% 0.43%

S&P 38.3% 33.0% 44.6% 22.5% 54.8% 50.4% 0.47%

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

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

Sources: NRSRO annual certifications for the 2020 and 2021 calendar years, Item 7A on Form NRSRO.
22 | OFFICE OF CREDIT RATINGS

The large NRSROs accounted for 94.4% of 

all the ratings outstanding as of December 31, 

2021—slightly lower than their 94.7% share 

as of December 31, 2020.32 The aggregate 

share of outstanding credit ratings of the large 

NRSROs decreased in two of the five categories, 

most significantly in the asset-backed securities 

category, which decreased by about 2 percentage 

points. The large NRSROs as a group also 

lost a small amount of their aggregate share of 

outstanding credit ratings in the government 

securities category, which may be attributable, 

in part, to the significant increase in government 

ratings reported by KBRA. KBRA reported 9,548 

government ratings outstanding as of December 

31, 2021, compared to only 141 as of December 

31, 2020. However, given the large number of 

government ratings outstanding in the aggregate, 

KBRA’s government ratings outstanding reflect 

only 0.56% of the total government ratings.

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 eight 

years, AMB reported that it had the most credit 

ratings outstanding in the insurance category.33

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, 2021. 

As illustrated by Chart 4, the largest proportion 

of the aggregate credit ratings reported to be 

outstanding were in the government securities 

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

98.8% of all outstanding ratings.

33 See 2021 Staff Report on NRSROs, which can be found under “Staff Reports on Nationally Recognized Statistical Rating 

Organizations” and the Annual 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/ocr/ocr-reports-and-studies.html.

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 79.0% of the total number of 

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 98.1% of all outstanding 

government securities ratings. 

Chart 4. Breakdown of Ratings Reported 

Outstanding by Rating Category as of 

December 31, 2021

5.9%

7.7%

6.4%

79.0%

1.0%

Government Securities 79.0%

Asset-Backed Securities 7.7%

Financial Institutions 6.4%

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 2021 

calendar year, Item 7A on Form NRSRO.
S TAFF REPORT | 23

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, 2021. 

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 16.4 and 5.0 

percentage points, respectively, when government 

securities are excluded. Fitch’s percentage share of 

outstanding ratings, on the other hand, increases 

by 7.7 percentage points when government 

securities are excluded. The percentage share for 

all the remaining NRSROs also increases when 

government securities are excluded. 

Further, when government securities are included 

in the total calculation, each of the small and 

medium NRSROs, except for DBRS and KBRA, 

has 0.7% or less of all outstanding ratings, 

making it difficult to assess their relative rating 

shares. When government securities are excluded, 

a clearer picture of the relative percentage 

shares of the small and medium NRSROs in 

Chart 5. Breakdown of Ratings Reported 

Outstanding by NRSRO as of December 31, 2021

12.4%

31.6%

2.8%

50.4%

1.4%

0.7%

0.4%

0.2%

0.1%

S&P 50.4%

Moody's 31.6%

Fitch 12.4%

DBRS 2.8%

KBRA 1.4%

EJR 0.7%

AMB 0.4%

JCR 0.2%

HR 0.1%

Percentages have been rounded to the nearest 

one-tenth of one percent.

Sources: NRSRO annual certifications for the 2021 

calendar year, Item 7A on Form NRSRO.

Chart 6. Breakdown of Non-Government Securities 

Ratings Reported Outstanding by NRSRO as of 

December 31, 2021

8.5%

26.6%

20.1%

4.5%

34.0%

3.1%

1.8%

0.9%

0.3%

S&P 34.0%

Moody's 26.6%

Fitch 20.1%

DBRS 8.5%

KBRA 4.5%

EJR 3.1%

AMB 1.8%

JCR 0.9%

HR 0.3%

Percentages have been rounded to the nearest 

one-tenth of one percent.

Sources: NRSRO annual certifications for the 2021 

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

the categories in which they are active can be 

observed, as illustrated in Chart 6. The percentage 

share of most of the small and medium NRSROs 

for all rating categories other than government 

securities as of December 31, 2021 did not change 

significantly compared to its percentage share as 

of December 31, 2020.34 The largest percentage 

share changes were KBRA, whose percentage 

share increased by 0.9%, and EJR whose 

percentage share declined by 1.5%. 

34 A comparison of Chart 6 in this Report with Chart 11 in Section IV.A.1 of the 2021 Staff Report on NRSROs (available 

at https://www.sec.gov/files/2022-ocr-staff-report.pdf) shows that each small and medium NRSRO’s total non-government 

securities ratings share as of December 31, 2021 remained constant or increased modestly compared to the ratings shares 

as of December 31, 2020. 

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 certification for the 

calendar year ending December 31, 2017 through 

2021.

As illustrated in Chart 8, reported ratings 

outstanding has 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, 2021, 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 outstanding for both DBRS and KBRA over 

the past five years. The extent of this increase for 

DBRS and KBRA 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.

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.

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 the increased 

competition in this rating class since 2017. Both 

DBRS and KBRA have steadily increased the 

number of ratings reported outstanding over the 

Chart 7. Breakdown of Government Securities 

Ratings Reported Outstanding on December 31, 2021

32.90%

54.77%

10.38%

0.56%

0.03%

0.02%

1.34%

S&P 54.77%

Moody's 32.90%

Fitch 10.38%

DBRS 1.34%

KBRA 0.56%

HR 0.03%

JCR 0.02%

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 2021 

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

past five years. While Moody’s and S&P continue 

to report the most ratings outstanding in this 

class, the number of outstanding ratings reported 

by these NRSROs is lower in 2021 as compared 

to 2017. Fitch’s number of ratings has increased 

since 2017, and ratings counts for each of Fitch, 

Moody’s, and S&P have remained fairly steady in 

recent years. 

Chart 8. Total Non-Government Ratings Issued by All NRSROs as of December 31, 2021

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2017 2018 2019 2020 2021

DBRS

EJR

Fitch

HR

AMB JCR

KBRA

Moody’s

S&P

Chart 9. Total Non-Government Ratings Issued by Medium and Small NRSROs as of December 31, 2021

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2017 2018 2019 2020 2021

DBRS

EJR

HR

JCR

KBRA

AMB
26 | OFFICE OF CREDIT RATINGS

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.35

The large NRSROs report employing 4,535 credit 

analysts (including supervisors), which is approximately 81.6% of the total number employed by all 

of the NRSROs. The small and medium NRSROs, 

in the aggregate, employ approximately 18.4% of 

all credit analysts employed by NRSROs.36 Total 

NRSRO analytical staff declined by about 1% 

compared to the information reported in the prior 

year annual certifications.

35 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).

36 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, and 16.3% of all NRSRO analysts in 2020. 

Chart 10. Total ABS Ratings Issued by All NRSROs as of December 31, 2021

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2017 2018 2019 2020 2021

DBRS

Fitch

KBRA

Moody’s

S&P

Chart 11. NRSRO Credit Analysts and 

Credit Analyst Supervisors

NRSRO

Credit Analysts 

(Including Credit 

Analyst Supervisors)

Credit Analyst 

Supervisors

AMB 155 62

DBRS 507 87

EJR 21 11

Fitch 1,288 330

HR 58 10

JCR 60 29

KBRA 214 59

Moody’s 1,670 256

S&P 1,577 127

Total 5,550 971

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

NRSRO’s annual certification for the 2021 calendar year 

filed on or before March 31, 2022.
S TAFF REPORT | 27

c. NRSRO Revenue

Chart 12 shows the percentage of total NRSRO 

revenues attributable to the large, medium, and 

small NRSROs since 2018.37 Changes to the 

composition of certain registered NRSROs in 

recent years may limit the comparability of the 

revenue distribution across the years.38 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 

has fallen below the level reported for fiscal year 

2019. The revenue share of the medium NRSROs 

has generally remained steady since 2018. In fiscal 

year 2021, the medium NRSROs regained most of 

the share of revenue lost in 2020, a year impacted 

by the onset of and response to COVID-19. The 

small NRSROs’ share of overall NRSRO revenue 

37 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. 

38 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.

39 See Moody’s Corporation, Annual Report on Form 10-K for the year ended December 31, 2021, available at https://www.

sec.gov/ix?doc=/Archives/edgar/data/0001059556/000105955622000012/mco-20211231.htm. 

has also remained consistent over this time 

period, and increased by 0.3% in fiscal year 2021. 

Although this percentage increase is modest in 

terms of aggregate revenue across all NRSROs, it 

represents a 50% increase in revenue attributable 

to the small NRSROs compared to fiscal years 

2020 and 2019.

Further revenue information is available for 

NRSROs that are owned, in whole or in part, by 

public companies. The following information is 

from the 2021 annual reports of public companies 

with an ownership interest in an NRSRO:

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

company, reported $3.8 billion in Moody’s 

external revenue for 2021, a 16% increase from 

2020. This increase, according to the report, 

was due to strong growth mainly driven by 

leveraged finance issuance, as issuers refinanced 

existing debt and funded merger and acquisition 

activity, and increased collateralized loan 

obligation and commercial mortgage-backed 

securities activity amid favorable market 

conditions. The corporate finance group, 

financial institutions group, public, project and 

infrastructure finance group, and structured 

finance group of Moody’s had an increase in 

revenue compared to 2020 results.39

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

parent company, reported $4.1 billion in S&P’s 

revenue for 2021, a 14% increase from 2020. 

This increase, according to the report, was 

due to higher bank loan ratings revenue and 

Chart 12. NRSRO Fiscal Year Revenue as a 

Percentage of Aggregate Reported Revenue

2021 2020 2019 2018

Large NRSROs 93.2% 94.1% 93.3% 93.5%

Medium NRSROs 5.6% 5.1% 5.9% 5.9%

Small NRSROs 1.1% 0.8% 0.8% 0.7%

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 2021. 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.
28 | OFFICE OF CREDIT RATINGS

structured finance revenue. Non-transaction 

revenue increased primarily due to an increase 

in surveillance, entity credit ratings, subsidiary 

revenue, and higher 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.40

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

company, reported $271 million in revenue 

from DBRS, a 30.8% increase in revenue from 

2020. This increase, according to the report, 

was due to robust commercial and residential 

mortgage-backed securities issuance, growth 

from fundamental ratings, expansion into 

U.S. and European corporate middle markets, 

and increased issuance in Canadian non-bank 

financials. Transaction-based revenue from 

one-time, transaction-based fees for ratings 

on newly-issued securities grew 31.2% in 

2021, which represented 65.7% of the revenue 

generated by DBRS. The remainder is classified 

as transaction-related revenue or revenue 

generated by annual fees tied to surveillance, 

research, and other services.41

Recent regulatory filings show a decline in revenues 

at Moody’s and S&P in the first half of 2022. 

Moody’s Corporation reported $1.5 billion in 

Moody’s external revenue for the first half of 2022, 

a 24% decrease compared with the same period 

in 2021. This decrease, according to the report, 

was due to declines in leveraged finance (high-yield 

40 See S&P Global Inc., Annual Report on Form 10-K for the year ended December 31, 2021, available at https://www.sec.

gov/ix?doc=/Archives/edgar/data/0000064040/000006404022000055/spgi-20211231.htm.

41 See Morningstar, Inc., Annual Report on Form 10-K for the year ended December 31, 2021, available at https://www.sec.

gov/ix?doc=/Archives/edgar/data/1289419/000128941922000005/morn-20211231.htm.

42 See Moody’s Corporation, Quarterly Report on Form 10-Q for the period ended June 30, 2022, available at https://www.

sec.gov/ix?doc=/Archives/edgar/data/0001059556/000105955622000051/mco-20220630.htm.

43 See S&P Global Inc., Quarterly Report on Form 10-Q, for the period ended June 30, 2022, available at https://www.sec.

gov/ix?doc=/Archives/edgar/data/0000064040/000006404022000143/spgi-20220630.htm. 

44 See Morningstar, Inc., Quarterly Report on Form 10-Q for the period ended June 30, 2022, available at https://www.sec.

gov/ix?doc=/Archives/edgar/data/1289419/000128941922000014/morn-20220630.htm.

corporate debt and bank loans) issuance resulting 

from market volatility relating to macroeconomic 

uncertainties, rising borrowing costs, and the 

Russia-Ukraine conflict.42

S&P Global reported $1.6 billion in revenue at 

S&P for the first half of 2022, a 20% decrease 

compared with the same period in 2021. This 

decrease, according to the report, was due to an 

unfavorable impact from foreign exchange rates, 

lower corporate bond ratings revenue driven by 

a decrease in high-yield and investment-grade 

issuance volumes, lower bank loan ratings 

revenue, decreased issuance of U.S. collateralized 

loan obligations, and reduced issuance volumes 

resulting from unfavorable macroeconomic conditions in 2022.43

Morningstar, Inc. reported $134.4 million in DBRS 

revenue for the first half of 2022, a 7.8% increase 

compared with the same period in 2021. This 

increase, according to the report, was achieved 

despite softer issuance across most geographies and 

asset classes. Additionally, while there was strong 

growth in commercial mortgage-backed securities 

issuance, this was partially offset by declines in 

asset-backed securities, residential mortgage-backed 

securities, and corporate and financial institution 

ratings. Finally, structured finance issuance slowed 

sharply due to the geopolitical environment and 

increased interest-rate volatility and liquidity 

premiums in Europe.44
S TAFF REPORT | 29

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. For example, Chart 3 indicates that, 

as of December 31, 2021, DBRS and KBRA, the 

only medium or small NRSROs that actively rate 

asset-backed securities,45 collectively had 26.3% 

of the ratings outstanding in the asset-backed 

securities rating category, which increased from 

24.3% as of December 31, 2020. However, 

the market share data discussed in this Section 

IV.A.246 shows that even higher market share 

percentages have been obtained by DBRS and 

KBRA in recent years for ratings issuance with 

respect to certain types of asset-backed securities. 

45 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 five outstanding asset-backed securities 

ratings as of December 31, 2021, all of which were issued before 2019. 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.

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

47 Prior to being integrated with DBRS, MCR also actively rated asset-backed securities.

48 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 August 5, 2022, 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 August 5, 2022. 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.

49 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 (the Securities Act).

50 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.

51 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. 

This market share data continues the growth 

trend the Staff has observed since 2011 for some 

medium NRSROs47 in the asset-backed securities 

rating category. 

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.48

a. CMBS

Charts 13 through 16 provide information 

concerning U.S.49 CMBS50 ratings by NRSROs, 

based on information from the Commercial 

Mortgage Alert database. NRSRO market share 

varies between the conduit CMBS and singleborrower CMBS segments,51 the two segments 
30 | OFFICE OF CREDIT RATINGS

that account for most of the non-agency52 U.S. 

CMBS transactions rated by NRSROs. The charts 

include reported market share information for total 

non-agency U.S. CMBS transactions,53 U.S. conduit 

52 “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. 

53 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.

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

share in the agency CMBS category.

55 The market share percentage for each NRSRO in Charts 13 through 16 reflects the total amount rated by the NRSRO as

a percentage of the total amount rated by all the NRSROs that assigned ratings. Market share percentages are provided 

based on both dollar amounts of issuance and number of deals rated. The sum of the market share percentages exceeds 

100% because it is typical for more than one NRSRO to rate a particular transaction. Likewise, the aggregate issuance 

volume and number of deals represented above exceed the Total Rated Market values for each time period. The source of 

the data for these charts is the Commercial Mortgage Alert’s CMBS database as of August 5, 2022.

CMBS transactions, U.S. single-borrower CMBS 

transactions, and agency CMBS transactions54 for 

the first half of calendar year 2022 and calendar 

years 2021 and 2020.55

Chart 13. Rating Agency Market Shares for Total Non-Agency U.S. CMBS Issued in 2020, 2021, and 

First Half of 2022

1H-2022 

Rank NRSRO

1H-2022

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2020 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Moody’s 34,989 35 71.0/63.6 38,342 45 34.7/31.7 25,076 42 46.3/50.0

2 Fitch 23,485 23 47.7/41.8 57,361 60 51.9/42.3 38,037 46 70.2/54.8

3 DBRS 23,197 23 47.1/41.8 56,655 71 51.2/50.0 21,893 34 40.4/40.5

4 KBRA 16,614 16 33.7/29.1 46,466 47 42.0/33.1 25,825 32 47.7/38.1

5 S&P 11,485 14 23.3/25.5 45,885 55 41.5/38.7 18,176 23 33.6/27.4

Total Rated Market 49,266 55 110,557 142 54,155 88

Chart 14. Rating Agency Market Shares for U.S. Conduit CMBS Issued in 2020, 2021, and First Half of 2022

1H-2022 

Rank NRSRO

1H-2022

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share % 

($)/(#)

2020 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Fitch 16,105 16 100.0/100.0 31,428 32 100.0/100.0 26,953 30 100.0/100.0

2 KBRA 10,124 10 62.9/62.5 25,809 26 82.1/81.3 17,400 20 64.6/66.7

3 Moody’s 8,258 8 51.3/50.0 6,771 7 21.5/21.9 11,457 15 42.5/50.0

4 DBRS 8,135 8 50.5/50.0 6,984 7 22.2/21.9 9,553 10 35.4/33.3

5 S&P 7,358 7 45.7/43.8 22,906 22 72.9/68.8 14,769 14 54.8/46.7

Total Rated Market 16,105 16 31,428 32 26,953 30
S TAFF REPORT | 31

Chart 15. Rating Agency Market Shares for U.S. Single-Borrower CMBS Issued in 2020, 2021, and 

First Half of 2022

1H-2022 

Rank NRSRO

1H-2022

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2020 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Moody’s 26,454 26 80.4/68.4 31,571 38 39.9/34.5 11,388 23 47.9/48.9

2 DBRS 15,062 15 45.8/39.5 49,671 64 62.8/58.2 10,108 20 42.5/42.6

3 Fitch 7,379 7 22.4/18.4 25,933 28 32.8/25.5 8,582 12 36.1/25.5

4 KBRA 6,213 5 18.9/13.2 20,657 21 26.1/19.1 7,231 9 30.4/19.1

5 S&P 4,127 7 12.6/18.4 22,979 33 29.9/30.0 3,154 8 13.3/17.0

Total Rated Market 32,884 38 79,128 110 23,776 47

Chart 16. Rating Agency Market Shares for Agency CMBS Issued in 2020, 2021, and First Half of 2022

1H-2022 

Rank NRSRO

1H-2022

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share % 

($)/(#)

2020 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Fitch 9,484 8 60.4/61.5 22,469 19 94.9/95.0 26,820 21 90.9/91.3

2 KBRA 8,406 7 53.6/53.8 7,538 7 31.8/35.0 14,480 11 49.1/47.8

3 DBRS 7,286 6 46.4/46.2 16,147 13 68.2/65.0 15,011 12 50.9/52.2

4 Moody’s 6,208 5 39.6/38.5 1,216 1 5.1/5.0 2,671 2 9.1/8.7

Total Rated Market 15,692 13 23,684 20 29,491 23

Charts 13 through 16 show that in 2020, 2021, 

and the first half of 2022 the large NRSROs 

generally held a large percentage of the market 

shares in rating non-agency U.S. CMBS transactions, but DBRS and KBRA have achieved significant market shares as well. 

As illustrated in Chart 13, in the first half of 2022, 

DBRS and KBRA had the third- and fourth-highest 

market shares, respectively, in the non-agency 

U.S. CMBS segment. In 2021, DBRS was closely 

behind Fitch for the second-highest market share, 

significantly increasing its market share since 2020. 

KBRA has consistently attained a market share 

over 34% since 2020, and in 2021 KBRA obtained 

a higher market share than Moody’s or S&P.

As of the first half of 2022, the U.S. conduit 

CMBS segment represented approximately 30% 

of the non-agency U.S. CMBS transactions. Since 

2020, Fitch has maintained the highest market 

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

all transactions. However, as illustrated in Chart 

14, KBRA has maintained the second-highest 

market share, measured by both dollar value of 

issuance and number of deals rated, in the U.S. 

conduit CMBS segment since 2020. Additionally, 

as of the first half of 2022, DBRS has rated just 

over half of these transactions. 

In 2021 and the first half of 2022, the relative size 

of the U.S. single-borrower segment was approximately two-thirds of all non-agency U.S. CMBS 
32 | OFFICE OF CREDIT RATINGS

transactions. As illustrated in Chart 15, DBRS has 

achieved significant market share in this segment, 

achieving the highest market share in 2021 and 

the second-highest for 2020 and the first 

half of 2022. 

As illustrated in Chart 16, Fitch had the highest 

market share in the agency CMBS segment 

during 2020 and 2021. However, over the same 

period, DBRS and KBRA had the second and 

third highest market shares, respectively, and 

KBRA and DBRS had the second and third 

highest market shares, respectively, for the first 

half of 2022. 

56 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.

57 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. 

58 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.

59 The market share percentage for each NRSRO in Charts 17 through 19 reflects the total amount rated by the NRSRO as

a percentage of the total amount rated by all the NRSROs that assigned ratings. Market share percentages are provided 

based on both dollar amounts of issuance and number of deals rated. The sum of the market share percentages exceeds 

100% because it is typical for more than one NRSRO to rate a particular transaction. Likewise, the aggregate issuance 

volume and number of deals represented above exceed the Total Rated Market values for each time period. The source of 

the data for these charts is the Asset-Backed Alert’s ABS database as of August 5, 2022.

b. ABS/MBS/CLO

Charts 17 through 19 provide information 

concerning U.S. ABS,56 U.S. MBS,57 and U.S. 

CLO58 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 2022 and calendar years 2021 and 2020.59

Chart 17 shows that DBRS and KBRA have gained 

and maintained significant U.S. ABS rating market 

shares. Since 2020, KBRA has grown its market 

share, and DBRS has consistently attained a market 

share of over 20%.

Chart 17. Rating Agency Market Shares for U.S. ABS Issued in 2020, 2021, and First Half of 2022

1H-2022 

Rank NRSRO

1H-2022

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2020 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 S&P 111,577 142 52.0/39.0 192,962 291 49.2/43.0 159,660 240 58.3/47.9

2 Moody’s 87,172 112 40.7/30.8 171,700 199 43.7/29.4 114,382 157 41.8/31.3

3 Fitch 79,980 115 37.3/31.6 135,558 177 34.5/26.1 109,286 151 39.9/30.1

4 KBRA 73,697 155 34.4/42.6 101,188 252 25.8/37.2 50,550 139 18.5/27.7

5 DBRS 43,541 99 20.3/27.2 123,106 233 31.4/34.4 76,125 168 27.8/33.5

Total Rated Market 214,373 364 392,476 677 273,685 501
S TAFF REPORT | 33

DBRS and KBRA have been able to gain market 

share in rating more traditional types of ABS. For 

example, in 2021 and the first half of 2022, DBRS 

rated 90.2% and 92.2% of transactions backed 

by student loans, which represented the highest 

market share.Likewise, in 2021 and the first half 

of 2022, KBRA rated 78.7% and 85% of transactions backed by small business loans, which 

represented the highest market share.60

Both DBRS and KBRA have maintained a significant market share in certain auto-related assetbacked securities. In 2021, DBRS rated 47.6% 

of the auto-fleet lease transactions, 33.1% of the 

subprime auto loan transactions, and 17.8% of 

the auto lease transactions. KBRA also maintained 

a significant market share in the subprime auto 

loan transactions, rating 35.1% of such transactions during 2021. This has largely continued 

into the first half of 2022, as DBRS rated 6.9% 

of the auto-fleet lease transactions, 31.7% of 

the subprime auto loan transactions, and 11.1% 

60 Asset-Backed Alert’s ABS database indicates that 50 student loan transactions totaling $32.3 billion and eight smallbusiness loan transactions totaling $1.2 billion were priced during 2021. Eight student loan transactions totaling $5.6 

billion and eight small-business loan transactions totaling $1.8 billion were priced during the first half of 2022.

61 Asset-Backed Alert’s ABS database indicates that the following transactions were priced during 2021: 13 auto-fleet 

lease transactions totaling $10.5 billion, 68 subprime auto loan transactions totaling $43.5 billion, and five auto lease 

transactions totaling $3.3 billion. The following transactions were priced during the first half of 2022: 15 auto-fleet lease 

transactions totaling $7.1 billion, 37 subprime auto loan transactions totaling $20.7 billion, and 18 auto lease transactions 

totaling $16.4 billion

of the auto lease transactions, and KBRA rated 

42.7% of the subprime auto loan transactions.61

Chart 18 shows that the U.S. MBS segment 

remains competitive. KBRA’s market share has 

increased from 34.5% in 2020 to 75.9% in the 

first half of 2022, although DBRS’ market share 

has decreased from 36.2% in 2020 to 10.4% in 

the first half of 2022. 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. For 

example, DBRS rated 76.9% of the re-performing 

mortgage transactions that priced in the first 

half of 2022. Additionally, KBRA and DBRS 

were active rating securities backed by subprime 

mortgages and risk transfer securities during 

the first half of 2022. For securities backed by 

subprime mortgages, KBRA rated 60.4% and 

DBRS rated 19.6% that priced during the first 

half of 2022; for risk transfer securities, KBRA 

Chart 18. Rating Agency Market Shares for U.S. MBS Issued in 2020, 2021, and First Half of 2022

1H-2022 

Rank NRSRO

1H-2022

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2020 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 KBRA 23,065 41 75.9/69.5 41,100 86 47.5/47.8 10,311 24 34.5/30.4

2 Moody’s 21,449 39 70.5/66.1 62,825 112 72.5/62.2 14,642 31 49.0/39.2

3 Fitch 15,488 27 50.9/45.8 32,996 75 38.1/41.7 14,755 46 49.4/58.2

4 DBRS 3,177 6 10.4/10.2 19,609 33 22.6/18.3 10,810 24 36.2/30.4

5 S&P 1,699 4 5.6/6.8 6,130 15 7.1/8.3 2,491 7 8.3/8.9

Total Rated Market 30,407 59 86,599 180 29,883 79
34 | OFFICE OF CREDIT RATINGS

rated 78.2% and DBRS rated 21.8% that priced 

during the first half of 2022.62

As shown in Chart 19, DBRS and KBRA have 

attained a foothold in the U.S. CLO segment, 

although S&P, Moody’s, and Fitch have had the 

highest market shares since 2020.

In addition to the more traditional categories of 

asset-backed securities classes discussed above, 

DBRS and KBRA have gained significant market 

share in some newer or more esoteric classes of 

asset-backed securities. For example, DBRS and 

KBRA 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 and the 

first half of 2022, both rating over 44% of the 

62 Asset-Backed Alert’s ABS database indicates that 15 re-performing mortgage transactions totaling $7.6 billion, 61 

subprime mortgage transactions totaling $24.1 billion, and 15 risk transfer transactions totaling $18.3 billion were priced 

during the first half of 2022.

63 Asset-Backed Alert’s ABS database indicates that 73 unsecured consumer loan transactions totaling $26.8 billion were 

priced during 2021, and 44 unsecured consumer loan transactions totaling $13.2 billion were priced during the first half of 

2022.

64 Asset-Backed Alert’s ABS database indicates that 16 aircraft-lease receivable transactions totaling $9.1 billion were priced 

during 2021, and two aircraft-lease receivable transactions totaling $1.1 billion were priced during the first half of 2022.

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

priced during 2021, and 11 whole business securitization transactions totaling $5.2 billion were priced during the first half 

of 2022.

transactions priced during this period. Comparatively, Moody’s, S&P, and Fitch each rated less 

than 30% of these transactions over the same time 

period.63

There are additional examples of market share 

gains achieved by a medium NRSRO in discrete 

asset classes. For instance, KBRA rated 85.0% and 

100% of the aircraft-lease receivables transactions 

that priced during 2021 and the first half of 2022, 

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

rated less than 55% of these transactions over the 

same time period.64 KBRA was also active rating 

whole-business securitizations during 2021 and the 

first half of 2022, rating 60.2% and 90.5%, respectively, of the issuance amount of such transactions. 

While S&P had a greater market share for 2021 

(rating 75% of the transactions), KBRA had the 

highest market share for the first half of 2022.65

Chart 19. Rating Agency Market Shares for U.S. CLOs Issued in 2020, 2021, and First Half of 2022

1H-2022 

Rank NRSRO

1H-2022

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2021 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

2020 

Issuance 

($Mil.)

No. of 

deals

Market 

Share %

($)/(#)

1 Moody’s 49,994 104 66.7/64.2 93,606 192 48.2/48.9 18,890 45 20.1/20.1

2 Fitch 35,416 72 47.3/44.4 39,195 76 20.2/19.3 32,815 72 35.0/32.1

3 S&P 28,877 62 38.5/38.3 101,931 207 52.5/52.7 81,589 193 87.0/86.2

4 KBRA 2,364 7 3.2/4.3 12,979 25 6.7/6.4 3,541 10 3.8/4.5

5 DBRS 151 3 0.2/1.9 3,227 4 1.7/1.0 330 1 0.4/0.4

Total Rated Market 74,953 162 194,333 393 93,785 224
S TAFF REPORT | 35

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 are 

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, which require the use of ratings 

of specified rating agencies.66 The effect of these 

requirements can 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 

66 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. 

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

68 See S&P Vaults Past Moody’s in Conduit Sector, Commercial Mortgage Alert, Jan. 24, 2020; S&P, Moody’s Duke It Out in 

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

69 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).

70 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.

71 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 continues 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.

of NRSROs,67 investment guidelines continue to 

be identified as a factor impacting the selection of 

NRSROs to rate certain transactions.68

A related barrier to entry is the inclusion requirements of some fixed income indices. To be 

included in certain of these indices, securities must 

be rated by specified NRSROs. 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, and they can increase 

the demand for securities bearing the ratings 

of particular NRSROs.69 For instance, 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.70

Market participants and academics have identified 

various other barriers to entry in the credit rating 

industry, including economic and regulatory 

barriers.71 For instance, when the Commission 
36 | OFFICE OF CREDIT RATINGS

proposed new rules and rule amendments in 

accordance with the Dodd-Frank Act (the 

NRSRO Amendments), commenters expressed 

concerns that certain of the proposed requirements would be burdensome for small NRSROs 

to implement and could raise barriers to entry 

for credit rating agencies to seek to register as 

NRSROs.72 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.73

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.74 For instance, certain 

provisions of the NRSRO Amendments were 

designed primarily to enhance the integrity 

of how NRSROs determine credit ratings by 

72 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.

73 See 2014 Adopting Release, 79 FR at 55254.

74 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).

75 See 2014 Adopting Release, 79 FR at 55091.

76 See id.

77 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.

78 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 supervisory board 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/ocr/ocr-commission-orders.html.

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 credit ratings.75

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.76

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.77

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 rules or Exchange Act 

provisions.78
S TAFF REPORT | 37

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 

the credit rating agency industry.”79 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;80

■ Consolidated information about credit rating 

histories;81

■ Information about material changes and 

significant errors in the procedures and 

methodologies used to determine credit 

ratings;82

■ Information about specific rating actions;83 and 

■ Clear definitions of each symbol, number, or 

score in the rating scale used by the NRSRO.84

NRSROs must also disclose certain information in 

connection with each rating action.85 Such infor79 See the preamble to the Rating Agency Act. 

80 See Instructions for Exhibit 1 to Form NRSRO. 

81 See Rule 17g-7(b). 

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

83 See Rule 17g-7(a). 

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

85 See Rule 17g-7(a). 

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

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

provide access to such reports for free.

88 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.

mation 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 

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.86

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.87

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.88
38 | OFFICE OF CREDIT RATINGS

NRSROs may also provide transparency to the 

extent they publish commentaries or research. 

NRSROs publish commentaries and research 

that generally include data, analyses, or projections on market sectors and economic outlooks.89

These publications may be helpful to investors 

to understand industry trends and the NRSROs’ 

credit views.

For example, following Russia’s invasion of 

Ukraine, NRSROs began publishing commentaries 

and research that provide their perspectives on the 

potential credit and rating impacts of the conflict 

on issuers and debt obligations in different market 

sectors. They also began publishing Russia-Ukraine 

conflict-related commentaries on economic and 

market trends. KBRA published a report that said 

an estimated 3.7 million Ukrainian refugees from 

the Russia-Ukraine conflict are likely to settle more 

permanently in host countries and that Poland’s 

spending on refugees has amounted to about 1% 

of its GDP through June 2022.90 A DBRS report 

expressed the view that despite the negative impact 

on many existing transactions secured by affected 

aircraft, it believes the nationalization of aircraft 

by Russia will not have a material impact on the 

issuance of future transactions because of the rarity 

of such events.91

NRSROs have also continued to produce 

research in recent years regarding their views 

on ESG matters and how they incorporate ESG 

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

90 See KBRA, Ukraine Refugee Crisis and Host Nation Fiscal Impacts (Aug 23, 2022), available at https://www.kbra.com/

documents/report/70214/esg-ukraine-refugee-crisis-and-host-nation-fiscal-impacts.

91 See DBRS, Secured Aviation Transactions: Jurisdictional Analysis, Political Risks, and Russian Aircraft Nationalization 

Implications (Aug 18, 2022), available at https://www.dbrsmorningstar.com/research/401563/secured-aviationtransactions-jurisdictional-analysis-political-risks-and-russian-aircraft-nationalization-implications.

92 See A.M. Best, Secondary Perils Increasingly Responsible for Largest US Catastrophes (Jan 14, 2022), 

available at https://www3.ambest.com/ambv/sales/bwpurchase.aspx?altsrc=108&record_code=316561&_

ga=2.34478628.405875056.1663286055-1130994754.1614722857.

93 See KBRA, EVs’ Popularity Could Diminish State Gasoline Taxes for Transportation Funds (Jul 18, 2022), available at 

https://www.kbra.com/documents/report/68864/ev-s-popularity-could-diminish-state-gasoline-taxes-for-transportationfunds.

considerations in their credit rating actions. For 

example, AMB published research presenting 

its view that secondary perils, such as wildfires, 

tornados, and severe thunderstorms, are 

accounting for a larger share of losses from 

catastrophe events than primary perils, such as 

hurricanes and floods, and that the heightened 

number of significant storms and weather events 

is an indication that climate change is having a 

more drastic and far-reaching effect on global 

weather events.92 KBRA wrote in its research that 

demand for electric vehicles will reduce gasoline 

taxes and related revenues and could pressure 

municipal bond issues that rely on them.93

A number of the Staff’s findings and recommendations in connection with the 2022 Section 15E 

examinations related to transparency issues. These 

findings included disclosure and reporting issues 

implicating Rule 17g-3, Rule 17g-7(a), 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 
S TAFF REPORT | 39

“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 if a credit 

rating upgrade or downgrade causes the market 

value of the security to increase or decrease or that 

a subscriber investing 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.

Section 15E and the related Commission rules 

address conflicts of interest.94 For example, Rule 

17g-5 identifies certain conflicts of interest that 

are prohibited under all circumstances95 and other 

conflicts of interest that are prohibited unless an 

NRSRO has publicly disclosed the existence of the 

conflict and has implemented policies and procedures reasonably designed to address and manage 

such conflict.96

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

95 See Rule 17g-5(c).

96 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.

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

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

99 Available at https://www.sec.gov/litigation/admin/2022/34-95127.pdf. 

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.97

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.98 In June 2022, the Commission 

instituted settled administrative and cease-anddesist proceedings against EJR and its founder 

and chief executive officer, Sean Egan, for, among 

other things, issuing or maintaining credit ratings 

where EJR employees, including Mr. Egan, who 

participated in determining the credit ratings also 

participated in the sales and marketing of a product 

or service of EJR and were also influenced by sales 

or marketing considerations in violation of Rule 

17g-5(c)(8).99 In addition, in November 2022, 

the Commission instituted settled administrative 

and cease-and-desist proceedings against S&P 

for issuing and maintaining credit ratings where 

commercial employees, who participated in sales 
40 | OFFICE OF CREDIT RATINGS

and marketing activity and were influenced by sales 

and marketing considerations, also participated in 

the determination of credit ratings in violation of 

Rule 17g-5(c)(8) by engaging in numerous communications with analytical staff.100

Other statutory provisions and Commission rules 

address conflicts of interest that may arise when 

a credit analyst seeks employment outside the 

NRSRO. Section 15E requires 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.101 Rule 17g-8(c) requires 

an NRSRO’s policies and procedures to address 

instances in which a “look-back” review deter100 See In re S&P Global Ratings, Exch. Act Rel. No. 96308 (Nov. 14, 2022), available at https://www.sec.gov/litigation/

admin/2022/34-96308.pdf.

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

102 See Rule 17g-8(c). 

mined 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.102

Several of the Staff’s findings and recommendations in connection with the 2022 Section 15E 

examinations related to conflict of interest issues. 

Among other things, these findings addressed 

apparent issues with policies and procedures 

to address and manage conflicts of interest. A 

description of these findings can be found in 

Section III.D.3 of this report.
S TAFF REPORT | 41

V. ACTIVITIES RELATING TO NRSROs

103 Available at https://www.sec.gov/litigation/admin/2022/34-96308.pdf.

104 Available at https://www.sec.gov/rules/other/2022/34-95243.pdf.

105 Available at https://www.sec.gov/litigation/admin/2022/34-95127.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 2022:

■ In re S&P Global Ratings, Exch. Act Rel. No. 

96308 (Nov. 14, 2022).103 The Commission 

instituted settled administrative and cease-anddesist proceedings against S&P concerning 

violations of Section 15E(h)(1) and Rules 

17g-5(c)(8)(i) and (ii). The violations were in 

connection with S&P commercial employees 

communicating with analytical staff and thereby 

becoming participants in the rating process for 

purposes of Rule 17g-5(c)(8). The SEC’s order 

also finds that S&P failed to establish, maintain, 

and enforce written policies and procedures 

designed to ensure compliance with Rules 

17g-5(c)(8)(i) and (ii).

■ Order Granting Registration of Demotech, 

Inc. as a Nationally Recognized Statistical 

Rating Organization, SEC Rel. No. 34-95243 

(July 11, 2022).104 The Commission granted 

the registration of Demotech, Inc. with the 

Commission as a nationally recognized 

statistical rating organization under Section 

15E for the insurance companies class of 

credit ratings.

■ In re Egan-Jones Ratings Company and Sean 

Egan, Exch. Act Rel. No. 95127 (June 21, 

2022).105 The Commission instituted settled 

administrative and cease-and-desist proceedings 

against EJR and Sean Egan concerning EJR’s 

violations of Sections 15E(h)(1) and 15E(f)(2) 

and Rules 17g-5(c)(8)(i) and (ii) and 17g-5(c)

(1) and Egan’s causing the Rule 17g-5(c)(8)

(i) and (ii) violations. The violations were in 

connection with failures to separate sales and 

marketing activities and considerations from 

the determination of credit ratings, the issuance 

and maintenance of credit ratings solicited by 

a person that, in the most recently ended fiscal 

year, provided the NRSRO with net revenue 

equaling or exceeding ten percent of the total 

net revenue of the NRSRO for the fiscal year, 

and the issuance and maintenance of ratings in 

certain classes of securities without prominently 

disclosing that such ratings were not issued or 

maintained by an NRSRO that was registered to 

issue ratings in such classes.

■ Removal of References to Credit Ratings From 

Regulation M, Release No. 34-94499 (Mar. 23, 
42 | OFFICE OF CREDIT RATINGS

2022), 87 FR 18312 (Mar. 30, 2022).106 The 

Commission re-proposed amendments to 

remove the references to credit ratings included 

in Rules 101 and 102 of Regulation M.

B. COURT JUDGMENT

The following judgment relating to litigation 

brought against a former NRSRO by the 

Commission was entered in calendar year 2022:

■ Securities and Exchange Commission v. 

Morningstar Credit Ratings, No. 1:21-cv-1359 

(S.D.N.Y. June 7, 2022).107 The U.S. District 

Court for the Southern District of New York 

entered a final judgment against MCR. The 

Commission’s complaint alleged that MCR 

violated certain disclosure and internal control 

provisions of Section 15E and certain related 

rules. MCR consented to the entry of the 

final judgment, which ordered it to pay a civil 

money penalty.

106 Available at https://www.federalregister.gov/documents/2022/03/30/2022-06583/removal-of-references-to-credit-ratingsfrom-regulation-m.

107 Available at https://www.sec.gov/litigation/litreleases/2022/judgment25409.pdf. 

108 Available at https://www.sec.gov/files/2022-ocr-staff-report.pdf. 

C. STAFF PUBLICATION

The Staff issued the following publication relating 

to NRSROs or credit ratings in general in calendar 

year 2022:

■ Staff Report on Nationally Recognized 

Statistical Rating Organizations, dated January 

2022 (the 2021 Staff Report), as required 

by Section 6 of the Rating Agency Act and 

Section 15E(p)(3)(C).108 The 2021 Staff Report 

addresses the matters described in the second 

paragraph under Section II of this Report for 

the period June 26, 2020 through December 31, 

2021, and summarizes the essential findings of 

the examinations conducted by the Staff under 

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

January 1, 2020 to December 31, 2020.
S TAFF REPORT | 43

VI. APPENDIX: SUMMARY OF 

STATUTORY FRAMEWORK 

AND RULES

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

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

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

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

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

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

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

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

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

118 See, e.g., Rule 17g-8(d)(1)–(4). 

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 Act109 and amended by the Dodd-Frank 

Wall Street Reform and Consumer Protection Act 

(Dodd-Frank Act).110

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.111

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,112 promptly 

update its filing in certain circumstances,113 and 

make its current Form NRSRO filing and most 

of its current Form NRSRO Exhibits available 

on its public website.114

■ Disclose certain information, including 

information concerning the NRSRO’s 

performance measurement statistics and its 

procedures and methodologies to determine 

ratings.115

■ 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,116 and retain records of its internal 

control structure.117

■ Consider certain factors with respect to its 

establishment, maintenance, enforcement, and 

documentation of an effective internal control 

structure.118
44 | OFFICE OF CREDIT RATINGS

■ 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.119

■ 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.120 The report must be accompanied 

by a signed statement by the NRSRO’s chief 

executive officer or an individual performing 

similar functions.121

■ 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,122 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.123

■ 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.124 The information 

form must disclose certain information with 

respect to the particular rating action.125

In addition, the NRSRO must attach to 

the information disclosure form a signed 

119 See, e.g., Rule 17g-8(a)(2)–(5). 

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

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

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

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

124 Rule 17g-7(a).

125 Rule 17g-7(a)(1)(ii)(A)-(N) specifies the information

that must be disclosed in the information disclosure 

form.
S TAFF REPORT | 45

statement by a person within the NRSRO with 

responsibility for the rating action.126

■ Make and retain, or retain, certain records, 

including a record documenting its established 

procedures and methodologies used to 

determine credit ratings127 and records related 

to its ratings.128 An NRSRO must promptly 

furnish to the Commission or its representatives 

copies of required records, including English 

translations of those records, upon request.129

■ 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.130

■ Establish, maintain, and enforce written 

policies and procedures reasonably designed 

to address and manage conflicts of interest.131

Certain conflicts of interest are expressly 

prohibited,132 and for other types of conflicts of 

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

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

128 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).

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

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

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

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

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

134 Rule 17g-6.

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

136 Section 15E(j)(3).

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

138 Section 15E(j)(5).

interest, the NRSRO must disclose the conflicts 

and have policies and procedures in place to 

manage them.133

■ Refrain from engaging in specified unfair, 

coercive, or abusive practices.134

■ 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.135

■ 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.136

■ 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 

employees or users of credit ratings.137 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.138
46 | OFFICE OF CREDIT RATINGS

■ Have a board of directors or similar governing 

body (collectively, the Board), certain of 

whose members must be independent from 

the NRSRO.139 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 

qualitative and quantitative data and models 

that the NRSRO uses to determine ratings.140

139 Section 15E(t)(2).

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

141 Rule 17g-9.

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

■ 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.141

■ Establish policies and procedures regarding 

post-employment activities of certain former 

personnel.142

WASHINGTON, DC