DBRS Comments on Rules Proposed by the SEC for Rating Agencies

DBRS has commented on the proposed rules by the U.S. Securities and Exchange Commission (SEC) for nationally recognized statistical rating organizations (NRSROs), File No. S7-18-11 (the Proposed Rules), designed to implement Title IX, Subtitle C of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act).

In the current rule making, the SEC proposes substantial additions to and revisions of the comprehensive regulatory regime established under the Credit Rating Agency Reform Act of 2006 (the 2006 Act). Most of the Proposed Rules are specifically mandated by the Dodd-Frank Act, with little room for discretionary input by the SEC. Although DBRS accepts the need for some regulatory change, DBRS is compelled to note that the Dodd-Frank Act’s approach to NRSROs has inherent contradictions that may impede, rather than promote, investor protection.

DBRS is committed to producing high-quality credit ratings and to conducting its business with integrity and transparency. To this end, DBRS supports a robust, yet sensible, NRSRO regulatory regime that fosters high industry standards and enables investor and market education, while respecting each rating agency’s right to determine credit ratings in accordance with procedures and methodologies of its own choosing. Although credit ratings are only one tool to be used in making investment decisions, the tool is an important one.

The DBRS response to the Proposed Rules is available under Regulatory Affairs at www.dbrs.com.