The SEC issued two staff reports on nationally recognized statistical rating organizations ("NRSROs"). The reports concluded that compliance and competition improved among credit rating agencies.
The 2017 Annual Report mandated by the Credit Agency Reform Act is intended to identify new NRSRO applicants and evaluate the "state of competition, transparency, and conflicts of interest" among NRSROs. The 2017 annual report showed continued competition between small NRSROs and more established rating agencies. SEC staff also noted specialization in rating categories and asset classes.
The 2017 Annual Summary Examination Report required by Title IX of the Dodd-Frank Act is intended to (i) evaluate compliance with securities laws, (ii) detect conduct and internal controls that potentially violated the securities laws, and (iii) propose remedial action when necessary. In this year's report, SEC staff observed that NRSROs have "substantially improved" compliance with the NRSRO rules adopted in 2014. The staff also highlighted a general improvement in compliance monitoring and internal audit functions, including instances in which NRSROs identified noncompliant activities and self-corrected.
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