DBRS Comments on SEC Study on Assigned Credit Ratings

DBRS has commented on the study that the U.S. Securities and Exchange Commission (the Commission) is undertaking pursuant to Section 939F of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Among other things, this study will assess the feasibility of establishing a system in which a utility or a self-regulatory organization (SRO) selects NRSROs to rate structured finance products. After completing its study, the Commission must furnish Congress with a report containing the study’s findings and any recommendations for statutory or regulatory changes necessary to implement those findings.

Although DBRS understands the need to enhance the quality of structured finance credit ratings by reducing the potential for conflicts of interest and increasing competition among rating agencies, DBRS believes that establishing a centralized system of hiring NRSROs to rate structured finance products is neither necessary nor appropriate in the public interest or for the protection of investors. These goals are better served by measures that require NRSROs to manage conflicts effectively and that give investors the tools they need to make informed choices about which credit ratings to employ in making their investment decisions. Such measures are being implemented pursuant to other provisions of the Dodd-Frank Act. DBRS further believes that a centralized system would be unworkable, ineffective, counterproductive, and potentially harmful to the capital markets.

The DBRS response to the Commission’s study is available under Regulatory Affairs at www.dbrs.com.

Back to top