What Is a Nationally Recognized Statistical Ratings Organization (NRSRO)?
A nationally recognized statistical ratings organization (NRSRO) is a credit rating agency that provides an assessment of the creditworthiness of a firm or financial instrument(s) that is registered and approved by the Securities and Exchange Commission (SEC).
Not all credit rating organizations are NRSROs. As of 2021, there are nine NRSROs registered with the SEC. The SEC Office of Credit Ratings administers its rules relating to NRSROs.
- Nationally Recognized Statistical Ratings Organizations (NRSROs) are SEC-recognized credit ratings agencies.
- Credit rating agencies are organizations that provide an assessment of the creditworthiness of a company or a financial instrument.
- There are currently nine NRSROs approved by the SEC, although other credit agencies do operate without being NRSROs.
Understanding Nationally Recognized Statistical Ratings Organizations
Credit rating agencies (CRAs) provide objective analyses and independent assessments of companies and countries that issue such securities. Here is a basic history of how the ratings and the agencies developed in the U.S. and grew to aid investors all over the globe.
Generally, to be considered a nationally recognized statistical ratings organization (NRSRO), the SEC must deem the agency to be "nationally recognized" in the U.S., and it must provide reliable and credible credit ratings. Also taken into consideration by the SEC are things like the size of the credit rating agency, operational capability, and the agency's financial resources.
The credit ratings provided by NRSROs are used by the U.S. government in several regulatory areas and are also used as benchmarks by federal and state agencies. Investors also refer to ratings by NRSROs. Some examples of current nationally recognized statistical rating organizations include Moody's Investors Service Inc., S&P Global Ratings, Fitch Ratings Inc., and Morningstar Credit Ratings, LLC.
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which enhanced the Commission’s oversight of the regulation of NRSROs.
Since large credit agencies often operate on an international scale, regulation occurs at several different levels. Congress passed the Credit Rating Agency Reform Act of 2006, allowing the SEC to regulate the internal processes, record-keeping, and certain business practices of CRAs. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, commonly referred to as Dodd-Frank, further grew the regulatory powers of the SEC including the requirement of a disclosure of credit rating methodologies.
Below is a list of credit rating agencies currently registered as NRSROs, organized in alphabetical order. SEC documents related to each NRSRO are accessible by clicking on the name of the NRSRO.
- A.M. Best Rating Services, Inc.
- DBRS, Inc.
- Egan-Jones Ratings Co.
- Fitch Ratings, Inc.
- HR Ratings de México, S.A. de C.V.
- Japan Credit Rating Agency, Ltd.
- Kroll Bond Rating Agency, Inc.
- Moody's Investors Service, Inc.
- S&P Global