This is a report of the Staff of the U.S. Securities and Exchange Commission. Staff reports, Investor Bulletins,

OFFICE OF CREDIT RATINGS
Staff
Report
ON 
NATIONALLY RECOGNIZED  
STATISTICAL RATING  
ORGANIZATIONS
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
January 2022
U.S. SECURITIES AND EXCHANGE COMMISSION

ii    |  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.

 STAFF REPORT    |  i
Contents
CHARTS  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  ii
I. MESSAGE FROM THE DIRECTOR  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .1
II. INTRODUCTION  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  3
A. Status of Registrants and Applicants  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  4
III. EXAMINATIONS AND MONITORING  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  7
A.  Overview  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
B.     Risk Assessment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  7
C.  Monitoring  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  9
D. 2021 Section 15E(p)(3) Examinations  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .10
1. 2021 Section 15E Examinations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2. Terms Used in This Report  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  11
3. Summary of Essential Findings and Responses to Material Regulatory Deficiencies .  .12
4. Responses to Recommendations from the 2020 Section 15E Examinations  . . . . . .18
5. Essential Findings Trends  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
IV. STATE OF COMPETITION, TRANSPARENCY, AND CONFLICTS OF INTEREST  . . . . . . . . .21
A.  Competition  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .21
1. Select NRSRO Statistics  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .21
2. Developments in the State of Competition Among NRSROs  . . . . . . . . . . . . . . 32
3. Barriers to Entry  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .41
B. Transparency  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  43
C. Conflicts of Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
V. ACTIVITIES RELATING TO NRSROS  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  49
A. Commission Orders and Releases  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  49
B. Staff Publications  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  50
C. Advisory Committees  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  50
VI. APPENDIX: SUMMARY OF STATUTORY FRAMEWORK AND RULES  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .51

ii    |  OFFICE OF CREDIT RATINGS 
Charts
Chart 1.            Table of NRSROs  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Chart 2.          Essential Findings by Section 15E Review Area: 2016 to 2021  .  .  .  .  .  .  .  .  .  .  .  .  .19
Chart 3.          Number of Essential Findings by Section 15E Review Area: 2016 to 2021  .  .  .  .  .  20
Chart 4.          Average Number of Essential Findings by Large, Medium, and  
Small NRSROs: 2016 to 2021  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Chart 5.          Number of Outstanding Credit Ratings as of December 31, 2020  
by Rating Category  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  23
Chart 6.          Year-Over-Year Changes in Percentage Share of Total Number of  
Ratings Outstanding from 2019 – 2020  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  23
Chart 7.  Percentage by Rating Category of Each NRSRO’s Outstanding  
Credit Ratings of the Total Outstanding Credit Ratings of all NRSROs  
as of December 31, 2020  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  24
Chart 8.          Percentage Change of Total Ratings Outstanding Per Asset Class  
2019 to 2020 – Large NRSROs Compared to Small/Medium NRSROs  .  .  .  .  .  .  .  25
Chart 9.          Breakdown of Ratings Reported Outstanding by Rating Category  
as of December 31, 2020  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  26
Chart 10.      Breakdown of Ratings Reported Outstanding by NRSRO as of  
December 31, 2020  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  26
Chart 11.        Breakdown of Non-Government Securities Ratings Reported Outstanding  
by NRSRO as of December 31, 2020  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  27
Chart 12.        Breakdown of Government Securities Ratings Reported Outstanding  
on December 31, 2020  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  27
Chart 13.        NRSRO Credit Analysts and Credit Analyst Supervisors  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  28
Chart 14.      NRSRO Fiscal Year Revenue as a Percentage of Aggregate  
Reported Revenue  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Chart 15.        Rating Agency Market Share for Total Non-Agency U.S. CMBS Issued in  
2019, 2020, and First Half of 2021  . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Chart 16.        Rating Agency Market Share for U.S. Conduit CMBS Issued in 2019, 2020,  
and First Half of 2021  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  34
Chart 17.        Rating Agency Market Share for U.S. Single-Borrower CMBS Issued in  
2019, 2020, and First Half of 2021  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Chart 18.        Rating Agency Market Share for Agency CMBS Issued in 2019, 2020,  
and First Half of 2021  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  35
Chart 19.        Rating Agency Market Shares for U.S. ABS Issued in 2019, 2020,  
and First Half of 2021  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  37
Chart 20.      Rating Agency Market Shares for U.S. MBS Issued in 2019, 2020,  
and First Half of 2021  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  38
Chart 21.        Rating Agency Market Shares for U.S. CLO Issued in First Half of  
2019, 2020, and First Half of 2021  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

STAFF REPORT    |  1
I. MESSAGE FROM
THE DIRECTOR
I
am pleased to share the Office of Credit Ratings’ 
(OCR) Staff Report (Report) on nationally recog-
nized statistical rating organizations (NRSROs) 
for calendar year 2021. During 2021, OCR, the 
U
.S. Securities and Exchange Commission (the 
Commission or SEC), and the market continued to 
navigate the extraordinary circumstances caused 
by COVID-19. Through it all, OCR continued, 
without interruption, to excel at its mission of 
assisting the Commission in protecting investors, 
promoting capital formation, and maintaining fair, 
orderly, and efficient markets through the oversight 
of NRSROs.
In past years, OCR published two separate annual 
reports: The Annual Report to Congress and the 
Summary Examination Report. For the first time, 
OCR has prepared one report that combines 
the information from the two reports to present 
OCR’s annual activity in a more integrated way. 
In addition to combining the reports, we have 
also made a variety of substantive and organiza-
tional changes to the Report to provide greater 
transparency about the NRSROs and their credit 
ratings businesses, and the market more broadly. 
For example, to increase transparency about 
OCR’s exam findings, the Report organizes the 
NRSROs into three groups—“large,” “medium,” 
and “small”—instead of two groups (“larger” and 
“smaller”) as in past years.
The Report includes a summary of the Commission 
staff’s (the Staff) essential findings from the most 
recently completed examination of each NRSRO. 
These examinations covered the eight statutorily 
mandated review areas and focused on certain 
subjects and activities that the Staff, through its 
risk assessment process, identified as relevant to 
certain NRSROs, including Environmental, Social, 
and Governance (ESG) issues, COVID-19, and 
collateralized loan obligations (CLOs). In addition, 
the Report also includes, for the first time, the 
Staff’s definitions of the terms “essential finding” 
and “material regulatory deficiencies” to provide 
greater transparency regarding OCR’s work.
OCR’s examinations have been successful in 
promoting greater compliance by NRSROs with 
applicable laws and rules as the NRSROs advance 
initiatives to address the Staff’s recommendations. 
The Report includes a new section on essential 
findings trends from examinations conducted 
between 2016 and 2021.

2    |  OFFICE OF CREDIT RATINGS 
The Report also discusses the state of competition, 
transparency, and conflicts of interest at NRSROs. 
Importantly, the Report illustrates that the small 
and medium NRSROs (as defined below) continue 
to compete with the largest three NRSROs, with 
each of the small and medium firms increasing its 
total number of ratings outstanding as compared 
to declines among two of the largest three firms. 
The data show these increases occurring across 
all rating categories and, though modest in total 
number, illustrate, in some cases, significant year-
over-year increases in rating activity for some firms. 
To help inform its risk assessment process, exam 
program, and policy initiatives, OCR monitors 
credit rating activity and industry developments, 
especially in connection with capital market and 
economic events and trends, such as ESG and 
COVID-19. Staff communicates with NRSROs  
and a variety of market participants, and reviews
NRSRO publications, news reports, trade publica-
tions, academic papers, and government reports, 
among other information sources.
The year continued to see OCR leadership and 
Staff engaged in discussions about the issues and 
challenges of diversity, equity, and inclusion. Along 
with our partners in the Office of Minority and 
Women Inclusion, the Office of Equal Employment 
Opportunity, and the Office of the Chair we will 
continue to embrace these topics as we continu-
ously work to fulfill our mission.
 
As proud as I am of everything OCR accomplished 
throughout 2021, I truly believe that the best is 
yet to come as OCR advances the SEC’s mission 
through the dedicated oversight of NRSROs in the 
coming years. I hope you find the Report inter-
esting and informative.
Ahmed Abonamah

 STAFF REPORT    |  3
II. INTRODUCTION
T
he Staff of the Commission provides this 
Report regarding 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
 This Report generally 
focuses on the period from January 1, 2021 to 
December 31, 2021 (the Report Period).
3
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 Representa-
tives 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 on examinations.
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.
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 The Annual Report and the Summary Examination Report covered different time periods. In order to align the time 
periods, Sections II.A and IV. of this Report include information about applications for registration as NRSROs and views 
of the Commission on the state of competition, transparency, and conflicts of interest among NRSROs from June 26, 
2020 through December 31, 2021 (the December 2020 Annual Report reported this information through June 25, 2020). 
Section V of this Report includes information about activities relating to NRSROs from December 1, 2020 through 
December 31, 2021 (the December 2020 Annual Report included this information through November 30, 2020).

4    |  OFFICE OF CREDIT RATINGS 
Information regarding the topics covered in this 
Report with respect to prior periods can be found 
on the OCR page of the Commission’s website.
4
Information regarding the registration and 
oversight program for credit rating agencies that 
are registered with the Commission as NRSROs 
can be found in Section VI. of this Report.
A. STATUS OF REGISTRANTS 
AND APPLICANTS
In 2007, the Commission began granting registra-
tions to credit rating agencies that applied to be 
registered as an NRSRO. Section 3(a)(62) defines 
a “nationally recognized statistical rating organi-
zation” 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 (as that term 
is defined in 17 CFR 229.1101(c)); 
(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, 2021, there were nine credit 
rating agencies registered as NRSROs.
6
 Chart 
1 below lists each NRSRO registered with the 
Commission, 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 The prior annual reports pursuant to Section 6 of the Rating Agency Act, through December 2020, 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. Separately, the prior summary reports of the Staff’s examinations of NRSROs 
pursuant to Section 15E(p)(3), through December 2020, can be found under “Summary Examination Reports” in the 
“Reports and Studies” section of the OCR webpage, available at https://www.sec.gov/ocr/ocr-reports-and-studies.html.
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 Rule 17g-1(e) 
and (1)(f), and each NRSRO must make its current Form NRSRO publicly and freely available on its website pursuant 
to Rule 17g-1(i). 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. 

 STAFF REPORT    |  5
Chart 1. Table of NRSROs
NRSROCategories of Credit RatingsPrincipal Office
A.M. Best Rating Services, Inc. (AMB)
(ii), (iii), and (iv)U.S.
DBRS, Inc. (DBRS)
(i) through (v)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, Inc. (KBRA)
(i) through (v)U.S.
Moody’s Investors Service, Inc. (MIS)
(i) through (v)U.S.
S&P Global Ratings (S&P)
(i) through (v)U.S.
For purposes of this Report only, we refer to Fitch, 
MIS, and S&P as “large NRSROs”; AMB, DBRS, 
and KBRA as “medium NRSROs”; and EJR, HR, 
and JCR as “small NRSROs” based on revenue.
8
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.
9
 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 
rating agency but it may not issue credit ratings as
an NRSRO.
10
 In addition, a credit rating agency 
may choose to apply for registration as an NRSRO 
in one or more rating categories.
11
 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.
No applications for initial registration as an 
NRSRO or for registration by a current NRSRO 
in additional rating categories were filed with the 
Commission in the Report Period. 
8 OCR’s prior reports categorized the NRSROs in two groups: the “larger NRSROs” (Fitch, MIS, and S&P) and the 
“smaller NRSROs” (AMB, DBRS, EJR, HR, JCR, and KBRA). Beginning with this Report, we have re-categorized  
the NRSROs into three groups based on revenue as reported on each NRSRO’s most recently filed Rule 17g-3(a)(3) 
financial report.
9 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.
10
 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.
11
 See Section 3(a)(62)(A)(i) – (vi).



 STAFF REPORT    |  7
III. EXAMINATIONS  
AND MONITORING
A.  OVERVIEW
G
enerally, the purpose of NRSRO exami-
nations is to promote compliance with 
applicable federal securities laws and 
rules by identifying potential instances of 
non-compliance of NRSROs with their statutory 
and regulatory obligations and encouraging 
remedial action. Examinations also inform the 
Commission and the NRSROs’ compliance 
personnel of regulatory obligations and 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, the Staff may refer findings to the 
Commission’s Division of Enforcement for investi-
gation.
Section 15E(p)(3)(B) provides that each NRSRO 
examination shall include a review 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.
B.  RISK ASSESSMENT
The 2021 Section 15E examinations encompassed 
all of the statutorily required Section 15E Review 
Areas. Within each of the Section 15E Review 
Areas, the Staff determined areas of emphasis 
and issues of focus for each NRSRO 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; 
 ■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; 

8    |  OFFICE OF CREDIT RATINGS 
 ■NRSROs’ self-identified weaknesses; and
 ■Relevant Tips, Complaints, and Referrals 
(TCRs) received by the Commission. 
The 2021 Section 15E examinations also focused 
on certain subjects and activities that the Staff, 
through its risk assessment process, identified as 
relevant to certain NRSROs, as summarized below. 
 ■ESG Factors and Products: NRSROs and their 
affiliates have developed and are offering an 
increasing number of ESG-related products and 
services.
12
 Development in the area has grown 
rapidly, and competition has increased among 
NRSRO and non-NRSRO providers, leading 
the Staff to identify several areas of potential 
risk to NRSROs. These include the risks that, 
in incorporating ESG factors into ratings 
determinations, NRSROs may not adhere to 
their methodologies or policies and procedures, 
consistently apply ESG factors, make adequate 
disclosure regarding the use of ESG factors 
applied in rating actions, or maintain effective 
internal controls involving the use in ratings of 
ESG-related data from affiliates or unaffiliated 
third parties. The Staff also identified the 
potential risk for conflicts of interest if an 
NRSRO offers ratings and non-ratings ESG 
products and services.
 ■COVID-19 Related Risk Areas: COVID-19 
caused a sudden economic shock that led 
to NRSROs downgrading certain ratings, 
changing their macroeconomic forecasts and 
assumptions, and revising some methodologies. 
The Staff identified as potential risks whether 
the NRSROs have sufficient controls in place 
to ensure that changes to assumptions and 
inputs are applied and disclosed in ratings 
determinations, and whether data collected by 
NRSROs during the pre-COVID period and 
used in ratings determinations was adjusted to 
reflect how assets will perform in a COVID-
affected economy. The Staff noted that such 
risks could have a heightened effect on the 
assignment and surveillance of ratings in 
particular sectors. 
 ■CLOs: Qualitative adjustments may be made 
during the rating process for certain CLOs. The 
Staff identified a potential risk that NRSROs 
may not adhere to their policies, procedures, 
and methodologies in making such adjustments, 
as well as the risk that the practice could lead to 
inconsistent use of ratings symbols. 
 ■Commercial Real Estate: Commercial real 
estate assets experienced a period of economic 
distress that could have an effect on credit 
ratings associated with such properties. The 
Staff identified a potential risk that NRSROs 
may not adhere to their policies and procedures 
regarding surveillance of such ratings, or to their 
methodologies with respect to the use of data 
associated with determining cash flows from the 
underlying properties and property valuations.
12 Some NRSROs offer ESG products and services separate from their credit ratings, and corporate affiliates of NRSROs, 
which are entirely separate from the NRSROs, may also offer ESG products and services. 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. These products and services are 
not credit ratings and are therefore not directly regulated by OCR.

 STAFF REPORT    |  9
 ■Consumer Asset-Backed Securities: The 
COVID-19 economic shock reduced consumer 
incomes resulting in potential impact to 
ratings on consumer asset-backed securities.  
The Staff identified potential risks to credit 
ratings with regard to repayment challenges,  
a lack of standardization with regard to 
servicers, reporting standards and treatment  
of forbearances, deferrals, and extensions, 
and the absence of standardized definitions  
of default in the sector, if NRSROs did not 
adhere to their relevant policies, procedures,  
and methodologies.
 ■Low-Investment Grade-Rated Corporates: 
The proportion of U.S. corporate debt rated in 
the BBB category increased over several years, 
reaching a historically high level in 2020. The 
Staff identified a risk posed to credit ratings 
if NRSROs did not adhere to their relevant 
surveillance practices, policies, procedures,  
and methodologies regarding such debt. 
 ■Municipal Securities: An NRSRO did not make 
a timely discovery of incorrect information it 
received regarding when securities had been 
paid off and also failed to identify existing 
rating errors where a rating had gone through 
the surveillance process. The Staff identified 
as a potential risk, particularly for NRSROs 
with a large volume of municipal ratings, that 
such NRSROs may lack adequate controls for 
detecting rating errors or may not adhere to 
policies and procedures used to determine when 
municipal ratings should be withdrawn. 
The foregoing were incorporated into the Section 
15E examinations as appropriate for each NRSRO.
C.  MONITORING
To help inform its risk assessment process and 
exam program, the Staff also actively monitored 
credit rating activity and industry developments 
during the Report Period, especially in connection 
with capital market and economic events and 
trends, such as ESG, COVID-19, cybersecurity,  
and digital assets. The Staff communicated with 
NRSROs and market participants, and reviewed 
NRSRO publications, news reports, trade publica-
tions, academic papers, and government reports, 
among other information sources.
The Staff’s monitoring efforts included, for 
example, discussions that covered the scope and 
nature of rating actions for which NRSROs cited 
the impact of COVID-19 and resulting business 
shutdowns as material credit considerations and 
how NRSROs incorporated ESG considerations 
into credit ratings and communicated such consid-
erations to the market. Monitoring also covered 
NRSRO considerations of distributed ledger 
technologies, digital assets, and smart contracts in 
credit ratings
13
 and NRSRO perspectives on cyber 
risk management and the vulnerability to and 
financial impact of cyber attacks.
13 OCR continues to monitor these developing areas and has observed limited NRSRO ratings activity. For example, 
in early 2020, DBRS rated debt securities issued on a blockchain, noting that the structuring consultant intends to 
issue security tokens to all investors and record the transaction on the Ethereum blockchain. See Press Release: DBRS 
Morningstar Finalizes Provisional Ratings on FAT Brands Royalty I, LLC (Mar. 9, 2020), available at https://www.
dbrsmorningstar.com/research/357772/dbrs-morningstar-finalizes-provisional-ratings-on-fat-brands-royalty-i-llc.

10    |  OFFICE OF CREDIT RATINGS 
The Staff also monitored other industry events 
during the Report Period, including, for example, 
the NRSRO response to Archegos Capital 
Management,
14
 the NRSRO approach to rating 
companies emerging from special purpose acqui-
sition company (SPAC) transactions,
15
 and the 
NRSRO response to financial stress experienced by 
Chinese property and development companies.
16
 
Monitoring also covered NRSRO projections for 
inflation, perceptions of its causes, and views as to 
the potential credit impacts on entities and transac-
tions across different market sectors. 
D. 2021 SECTION 15E(p)(3) 
EXAMINATIONS
1. 2021 Section 15E Examinations
The 2021 Section 15E examinations generally 
focused on the NRSROs’ activities for the period 
covering January 1, 2020 through December 31, 
2020 (the Review Period). Examinations also 
reviewed certain activities or credit rating actions 
from outside the Review Period.
17
 
The 2021 Section 15E examinations reviewed  
the Section 15E Review Areas and examined  
each NRSRO’s adherence to 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.
18
During the Review Period, 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 agencies.
19
 During the 
Review Period, each college conducted periodic
14 See e.g., Fitch, Archegos Fallout Signals Heightened Counterparty, Regulatory Risk, available at https://www.fitchratings.
com/research/banks/archegos-fallout-signals-heightened-counterparty-regulatory-risk-01-04-2021.
15
 See e.g., S&P, Credit FAQ: SPACs and Credit Quality: S&P Global Ratings’ Recent Ratings Experience, available at 
https://www.spglobal.com/ratings/en/research/articles/210312-credit-faq-spacs-and-credit-quality-s-p-global-ratings-
recent-ratings-experience-11868991.
16
 See e.g., Moody’s, Research Announcement: Chinese Property Developers’ Liquidity Stress Will Continue Amid Tight 
Credit Conditions and Lowered Sales, available at https://www.moodys.com/research/Moodys-Chinese-property-
developers-liquidity-stress-will-continue-amid-tight--PBC_1311317.
17
 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.
18
 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.
19
 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 colleges for S&P and MIS, and OCR Staff 
represents the SEC in this regard. The European Securities and Markets Authority serves as chair of the college for Fitch.

 STAFF REPORT    |  11
calls to discuss supervisory activities related to the 
credit rating agencies. The Staff also conducted 
additional discussions with international regulators, 
as appropriate.
2. Terms Used in This Report
Section 15E(p)(3)(C)(i)-(iii) requires this Report to  
contain a summary of, respectively, the essential  
findings of the annual examinations, as deemed  
appropriate by the Commission; the NRSROs’ 
responses to any material regulatory deficiencies 
identified by the Commission; and whether the 
NRSROs have appropriately addressed the recom-
mendations of the Commission contained in 
previous reports.
20
For purposes of this Report, the Staff considers an 
“essential finding” to be any instance 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.
The Staff’s determination that an NRSRO appro-
priately addressed a recommendation does not 
constitute its endorsement of that NRSRO or its  
policies, procedures, internal controls, or opera-
tions. In a future examination, the Staff may 
reevaluate the NRSRO’s response to recommenda-
tions 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 determination of whether an 
NRSRO appropriately addressed a recommen-
dation reflects solely the Staff’s view and does not 
necessarily reflect the views of the Commission. 
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.
20 In this Report, essential findings are organized by NRSRO within the applicable large, medium, and small groups. This 
Report uses the phrases “significant,” “numerous,” “several,” and “some” to describe and distinguish the frequency of 
conduct or instances underlying certain essential findings. The particular phrase used generally reflects the number of 
instances during the Review Period, recognizing that the number of instances may be reflective of a test sample and not 
necessarily an NRSRO’s comprehensive activities during the Review Period.

12    |  OFFICE OF CREDIT RATINGS 
3. Summary of Essential Findings and 
Responses to Material Regulatory 
Deficiencies
a. Large NRSRO #1
(1) The NRSRO did not report an allegation of 
fraud and therefore did not appear to comply 
with Section 15E(u) or the NRSRO’s policies 
and procedures. The NRSRO issued a credit 
rating on a bond after the underwriter for 
the bond communicated to an analyst of the 
NRSRO an allegation of potential fraud relating 
to the authenticity of a letter of credit upon 
which such credit rating was based. The Staff 
also noted that the NRSRO did not withdraw 
the credit rating for some months during which 
the NRSRO had knowledge of a potential fraud. 
The Staff recommended that the NRSRO adhere 
to its policies and procedures to ensure that it 
fulfils its obligations under Section 15E(u). 
 
The Staff identified such essential finding as a 
material regulatory deficiency.  
 
The NRSRO stated in its response that, while 
the analyst inquired of the underwriter and its 
counsel, the analyst did not report the matter 
because communication with the underwriter 
led him to believe that the matter was under 
review by the bank that provided the letter 
of credit. The NRSRO also stated that the 
failure of the transaction to close was not itself 
indicative of fraud because transactions can fail 
to close for other reasons. The NRSRO agreed 
that the allegation should have been reported 
to the compliance department, and the NRSRO 
conducted an internal investigation, resulting 
in discipline of the analyst. Furthermore, 
the NRSRO issued a communication to all 
employees regarding their obligations to 
internally report allegations that may implicate 
the NRSRO’s obligations under Section 15E(u), 
encouraging them to consult with a compliance 
officer if they have any doubt as to whether a 
particular matter should be reported.  
(2) The NRSRO did not appear to preserve certain 
documents in the manner that the NRSRO’s 
policies and procedures require, and the 
NRSRO did not promptly produce complete 
copies of records required to be retained in 
accordance with Rule 17g-2(b)(2). The NRSRO 
also did not timely provide to the Staff other 
documents in accordance with Rule 17g-2(f). 
The Staff recommended that the NRSRO 
ensure that it includes all relevant documents 
in its productions and retains required records 
in a way that enables it to promptly furnish 
complete copies of such records in response to 
requests from the Staff. 
(3) The NRSRO did not appear to evaluate and 
record all potential complaints in the manner 
that its policies and procedures required. The 
NRSRO also did not document its conclusion 
with respect to handling a complaint, contrary 
to the NRSRO’s policies and procedures. The 
Staff recommended that the NRSRO ensure 
that all complaints are subject to its policies 
and procedures for the receipt, retention, and 
treatment of complaints.
b. Large NRSRO #2
(1) The NRSRO did not appear to comply with 
Rule 17g-7(a) disclosure requirements when 
taking a significant number of rating actions. 
As a result of a coding error that the NRSRO 
identified in its systems, the NRSRO did not 

 STAFF REPORT    |  13
timely publish information disclosure forms 
for a significant number of surveillance rating 
actions during some years. The Staff recom-
mended that the NRSRO ensure compliance 
with Rule 17g-7(a) disclosure requirements. 
(2) The NRSRO did not appear to enforce its 
policies and procedures as required by Section 
15E(h)(4)(A) and (5)(A). The NRSRO produced 
to the Staff a report that identified a number of 
instances where the NRSRO did not appear to 
comply with its policies and procedures related 
to statutorily-mandated post-employment 
requirements. Among other things, such report 
indicated that the NRSRO did not submit 
certain Employment Transition Reports to the 
Commission. The Staff recommended that the 
NRSRO enforce its policies and procedures 
related to post-employment requirements.
c. Large NRSRO #3
(1) The NRSRO made clarifying changes to a draft 
rating report for an issuer’s credit rating after 
receiving comments from the issuer, and such 
changes did not appear to be approved in the 
manner required by the NRSRO’s policies and 
procedures. The Staff recommended that the 
NRSRO ensure that it adheres to its policies 
and procedures for documentation evidencing 
approval of changes to a rating report requested 
by an issuer. 
(2) The NRSRO did not appear to have effective 
internal controls pursuant to Section 15E(c)
(3)(A) to ensure that it does not inadvertently 
withdraw certain active credit ratings. Specifi-
cally, the NRSRO reported two instances in 
which it inadvertently withdrew from its 
website a significant number of credit ratings  
for active securities. Such instances were based 
on the NRSRO incorrectly processing third 
party data. The Staff recommended that the 
NRSRO establish effective internal controls to 
ensure that it does not inadvertently withdraw 
certain active credit ratings.
d. Medium NRSRO #1
(1) The NRSRO issued and maintained some credit 
ratings that appeared to be prohibited by Rule 
17g-5(c)(2). Contrary to the NRSRO’s policies 
and procedures, certain NRSRO employees 
held restricted securities in a managed account 
and the NRSRO’s compliance department did 
not routinely perform post-trade reviews of 
brokerage statements for managed accounts. 
On some occasions, an analyst participated 
in a rating committee while holding securities 
of the rated entity in a managed account. 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 held in employees’ managed accounts. 
 
The Staff identified such essential finding as a 
material regulatory deficiency.  
 
In its response, the NRSRO stated that it 
has commenced an action plan designed to 
strengthen relevant systems, practices, policies, 
resources, and personnel. The action plan 
includes, among other things: (i) changes to the 
organizational design and staffing of a relevant 
team; (ii) selection and deployment of a new 
system used to monitor and enforce compliance 
with applicable procedures; (iii) an organiza-
tional initiative led by senior management to 
foster adherence to policies and procedures;  

14    |  OFFICE OF CREDIT RATINGS 
(iv) a review, led by counsel, of (and appropriate 
enhancements to) policies, procedures and 
practices focused on avoidance or management 
of actual, potential or perceived conflicts 
of interest relating to the issuance of credit 
ratings; (v) improvements to certain compliance 
reporting to senior management; and  
(vi) outreach by compliance to analytical 
personnel regarding their responsibilities and 
obligations under applicable policies and 
procedures, with a particular focus on securities 
held in managed accounts. The NRSRO has 
completed some measures of such action plan, 
and others are still on-going. The NRSRO will 
continue assessing the robustness of its action 
plan and may implement additional measures. 
(2) The NRSRO did not appear to enforce its 
policies and procedures in some instances as 
Section 15E(g)(1) requires, by granting access to 
certain information without required approval, 
mistakenly sending certain information intended 
for one recipient to numerous recipients, and not 
taking reasonable steps to protect confidential 
information from inadvertent disclosure. The 
Staff recommended that the NRSRO enforce 
its policies and procedures with respect to the 
protection of material non-public information. 
(3) The NRSRO did not appear to follow Section 
15E(b)(2), Rule 17g-1(f), and the Form NRSRO 
Instructions when filing certain information 
with the Commission. The NRSRO filed with 
the Commission some Form NRSRO Exhibits 
that included incomplete transition/default 
matrices, incomplete and potentially inaccurate 
identifications of conflicts of interest relating to 
the issuance of credit ratings, and incomplete 
information about the NRSRO’s DCO. The 
Staff recommended that the NRSRO ensure that 
all Form NRSRO filings adhere to the Form 
NRSRO Instructions and the required infor-
mation is accurate and complete.
e. Medium NRSRO #2
(1) The NRSRO did not appear to adhere to Rule 
17g-7(a)(1)(iii) when publishing Rule 17g-7(a) 
information disclosure forms. Such forms did 
not contain an attestation that was signed as 
the rule requires. In addition, the attestation 
provided was inconsistent with the requirements 
of the rule. The Staff recommended that the 
NRSRO ensure that a person with responsi-
bility for the rating action signs the information 
disclosure forms and attests to the statements 
contained therein and that all such statements 
are consistent with the requirements of Rule 
17g-7(a)(1)(iii). 
(2) The NRSRO did not appear to make certain 
disclosures that Rule 17g-7(a)(1)(ii)(B) requires 
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 information disclosure 
forms the version of the methodology used to 
determine credit ratings. 
(3) The NRSRO did not appear to comply with 
Rule 17g-7(a)(1)(ii)(L)(1) for certain credit 
ratings. Specifically, the NRSRO’s information 
disclosure form for certain rating actions did 
not include applicable information related to 
the historical performance of the relevant credit 

 STAFF REPORT    |  15
rating. The Staff recommended that the NRSRO 
ensure that its information disclosure forms for 
all rating actions contain the information that 
Rule 17g-7(a)(1)(ii)(L)(1) requires. 
(4) The NRSRO did not appear to provide a 
required disclosure about the conflict of interest 
described in Rule 17g-5(b)(6) in Exhibit 6 of 
Form NRSRO, given that the NRSRO’s policies 
and procedures allowed employees, in certain 
circumstances, to own securities of issuers or 
obligors subject to a credit rating determined by 
the NRSRO. Also, the NRSRO recorded that 
during the Review Period, eight employees held 
or purchased restricted securities contrary to 
such policies and procedures. The Staff recom-
mended that the NRSRO disclose conflicts of 
interest related to securities ownership by its 
employees, as the Instructions to Form NRSRO 
require, and establish, maintain, and enforce 
written policies and procedures designed to 
address and manage conflicts of interest. 
(5) The NRSRO’s policies and procedures did not 
appear to be reasonably designed to ensure 
that it will promptly publish the notice of the 
existence of a significant error as Rule 17g-8(a)
(4)(ii) requires. The NRSRO’s policies and 
procedures required the NRSRO to publish 
notice of the existence of a significant error 
identified in a procedure or methodology only 
after the development and approval of a revised 
procedure or methodology. Application of 
these policies and procedures is likely to delay 
publication of such notice. The Staff recom-
mended that the NRSRO establish, maintain, 
enforce, and document policies and procedures 
reasonably designed to ensure that it promptly 
publishes notice of the existence of a significant 
error as Rule 17g-8(a)(4)(ii) requires.
f. Medium NRSRO #3
(1) The NRSRO did not appear to adhere to Rule 
17g-7(a)(1)(iii) when publishing Rule 17g-7(a) 
information disclosure forms. Such forms 
contained an attestation that was inconsistent 
with the requirements of the rule. The Staff 
recommended that the NRSRO ensure the attes-
tation statement in information disclosure forms 
is consistent with Rule 17g-7(a)(1)(iii) text. 
(2) The NRSRO did not appear to enforce 
its policies and procedures with regard to 
publishing on an easily accessible portion of 
its website information relating to material 
changes to methodologies, as Rule 17g-8(a)
(4)(i) requires. The NRSRO’s reason for 
certain material changes to methodologies 
and disclosure about the likelihood those 
changes will result in changes to any current 
credit ratings were not easily accessible on the 
NRSRO’s website, as its policies and proce-
dures require. The Staff recommended that the 
NRSRO ensure that it promptly publishes on an 
easily accessible portion of its website material 
changes to methodologies, the reason for the 
changes, and the likelihood the changes will 
result in changes to current credit ratings. 
(3) The NRSRO did not withdraw credit ratings on 
certain matured bonds that the NRSRO stated 
it should have withdrawn and, accordingly, it 
did not appear that the NRSRO maintained 
effective internal supervisory controls as 

16    |  OFFICE OF CREDIT RATINGS 
required by Section 15E(c)(3)(A). The Staff 
recommended that the NRSRO enhance its 
internal controls to ensure that credit ratings on 
bonds that have matured are promptly detected 
and withdrawn. 
(4) The NRSRO’s policies and procedures regarding 
complaints by employees did not appear to 
adequately address all of the requirements of 
Section 15E(j)(3). Specifically, such policies and 
procedures did not address complaints from 
employees regarding credit ratings, models, and 
methodologies and did not address employee 
complaints about the NRSRO or certain other 
third parties. The Staff recommended that the 
NRSRO establish procedures for the receipt, 
retention, and treatment of complaints to 
adequately address the requirements of Section 
15E(j)(3) for complaints from employees.
g. Small NRSRO #1
(1) The NRSRO did not appear to have reasonably 
designed procedures to ensure accurate, reliable, 
and consistent revenue information to effec-
tively monitor and prevent the occurrence of the 
conflict of interest identified in Rule 17g-5(c)
(1). The Staff recommended that the NRSRO 
establish, maintain, and enforce written policies 
and procedures, including policies and proce-
dures regarding the recognition of revenue 
in accordance with applicable accounting 
standards, reasonably designed to ensure that 
the NRSRO does not issue or maintain credit 
ratings subject to the prohibited conflict of 
interest specified in Rule 17g-5(c)(1). 
 
The Staff identified such essential finding as a 
material regulatory deficiency. 
 
In its response, the NRSRO stated that it is 
drafting a new policy and procedure to address 
the finding and recommendation in accordance 
with applicable standards relating to revenue 
from customer contracts. The NRSRO further 
stated that the new policy and procedure will 
provide requirements to ensure that revenue 
is recognized according to the new policy and 
procedure and will also include provisions 
addressing treatment for Rule 17g-5(c)(1) 
purposes where a client is billed in separate 
years. The NRSRO represented that it will begin 
complying with the new policy and procedure 
by January 1, 2022.  
(2) The NRSRO published information disclosure 
forms that did not appear to comply with Rule 
17g-7(a)(1)(ii)(J)(1), (K), and (M). Specifically, 
several such forms did not include required 
disclosures regarding the source of payment for 
the credit rating, the potential volatility of the 
credit rating, and the 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 
the disclosures that Rule 17g-7(a)(1)(ii) requires. 
(3) The NRSRO’s policies and procedures did not 
appear to be reasonably designed pursuant to 
Section 15E(h)(1) to prevent the occurrence 
of the prohibited conflict of interest in Rule 
17g-5(c)(7). The NRSRO’s policies and proce-
dures allowed employees to receive gifts with 
a specified limited dollar amount, but did not 
limit such gifts to items provided in the context 
of normal business activities such as meetings. 
The Staff recommended that the NRSRO 
establish, maintain, and enforce written policies 

 STAFF REPORT    |  17
and procedures reasonably designed to ensure 
that it does not issue or maintain credit ratings 
subject to the prohibited conflict of interest 
specified in Rule 17g-5(c)(7). 
(4) The NRSRO appeared to misrepresent the 
effect of its registration as an NRSRO in certain 
rating reports. The NRSRO made a statement 
in several reports accompanying a non-credit 
rating product that appeared to misrepresent 
the effect of the NRSRO’s registration as an 
NRSRO and could lead recipients of the reports 
to mistakenly conclude that such product is 
an NRSRO rating. The Staff also noted that 
certain templates for reports and letters of the 
NRSRO potentially could result in misrepre-
sentations or false statements in the future. The 
Staff recommended that the NRSRO revise its 
templates for reports and letters so that they do 
not contain any statements about its registration 
with the SEC as an NRSRO that are incorrect 
or misleading or that misrepresent the effect of 
such registration. 
(5) The NRSRO’s policies and procedures for the 
receipt, retention, and treatment of complaints 
appeared to improperly exclude certain 
complaints. The Staff recommended that the 
NRSRO revise its policies and procedures for the 
receipt, retention, and treatment of complaints 
to ensure that they cover all complaints contem-
plated under Section 15E(j)(3).  
(6) The NRSRO’s policies and procedures did 
not appear to require the disclosure of the 
information that Rule 17g-7(a)(1)(ii)(J)(3)(i) 
and (J)(3)(ii) require for rating revisions and 
affirmations, respectively, resulting from a 
look-back review. The Staff recommended that 
the NRSRO establish, maintain, and enforce 
policies and procedures that are reasonably 
designed to ensure that the information required 
by Rule 17g-7(a)(1)(ii)(J)(3) is included with 
the publication of a revised credit rating or 
affirmation following a look-back review that 
determines that a conflict of interest had influ-
enced the rating.
h. Small NRSRO #2
(1) The NRSRO did not appear to adhere to Rule 
17g-7(a) and its policies and procedures with 
regard to the publication of an information 
disclosure form for a credit rating withdrawal. 
Such policies and procedures did not appear to 
accurately reflect the Rule 17g-7(a) disclosure 
requirements, and the NRSRO did not publish 
a required information disclosure form for 
the withdrawal. Also, the NRSRO did not 
appear to generate a certain report as the 
NRSRO’s policies and procedures require. The 
Staff recommended that the NRSRO ensure it 
adheres to its policies and procedures, and all 
applicable requirements under Rule 17g-7(a), 
when it withdraws a credit rating. 
(2) The NRSRO did not appear to have effective 
internal controls pursuant to Section 15E(c)
(3)(A) governing surveillance of certain ratings 
and did not appear to adhere to the applicable 
methodology. Specifically, the NRSRO did 
not perform surveillance of a credit rating in 
accordance with the enumerated time period in 
the NRSRO’s methodology. Also, such method-
ology did not clearly indicate how frequently 
the NRSRO must conduct surveillance on such 
rating. The Staff recommended that the NRSRO 

18    |  OFFICE OF CREDIT RATINGS 
enhance its internal controls with respect to its 
policies and procedures governing surveillance 
of certain credit ratings. The Staff also recom-
mended that the NRSRO ensure that it adheres 
to the applicable methodology. 
(3) The NRSRO did not appear to have effective 
internal controls pursuant to Section 15E(c)(3)
(A) governing the review and testing of its credit 
rating models. Specifically, the NRSRO used 
a model in determining credit ratings which 
contained data that was not consistent with the 
NRSRO’s policies and procedures. Such model 
also contained errors with one or more formula 
references. The Staff recommended that the 
NRSRO enhance its internal controls governing 
the review and testing of its credit rating models.
i. Small NRSRO #3
(1) The NRSRO did not appear to have effective 
internal controls pursuant to Section 15E(c)(3)
(A) with respect to credit ratings that are linked 
to other credit rating actions. Specifically, the 
NRSRO took a rating action on an outstanding 
credit rating without taking appropriate 
action with respect to a linked credit rating, 
and the NRSRO did not have an effective 
internal control at the relevant time to ensure 
that the NRSRO takes such action. The Staff 
recommended that the NRSRO establish, 
maintain, enforce, and document effective 
internal controls to ensure that it correctly issues 
and maintains credit ratings that are linked to 
other credit rating actions.
4. Responses to Recommendations from  
the 2020 Section 15E Examinations
To assess whether NRSROs appropriately 
addressed findings from the 2020 Section 15E 
examinations, the Staff reviewed each NRSRO’s 
written response describing its planned remedial 
measures, and participated in calls with each 
NRSRO to discuss its written response.
During the 2021 Section 15E examinations, the 
Staff assessed each NRSRO’s progress in imple-
menting 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 the Staff may 
not be able to fully assess the effectiveness of these 
measures during the 2021 examination. 
The Staff has determined all findings from the  
2020 Section 15E examinations have been appro-
priately addressed, except in one instance. In such 
instance, the Staff issued a finding relating to a 
small NRSRO’s revenue recognition practices 
related to the NRSRO’s obligations under Rule 
17g-5(c)(1) and recommended that the NRSRO 
establish, maintain, and enforce policies and 
procedures that are reasonably designed to ensure 
that it does not issue or maintain ratings subject to 
the Rule 17g-5(c)(1) prohibited conflict of interest. 
However, as discussed further in Section III.C.3(g), 
the Staff observed in the 2021 examination that, 
despite efforts to address the previous finding, 
the NRSRO did not appear to have reasonably 

 STAFF REPORT    |  19
designed procedures to ensure accurate, reliable, 
and consistent revenue information to effectively 
monitor and prevent the occurrence of the conflict 
of interest identified in Rule 17g-5(c)(1). Except  
for such instance, NRSROs generally addressed 
2020 recommendations 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.
5. Essential Findings Trends
Chart 2 depicts the percentage of essential find- 
ings by Section 15E Review Area for all NRSROs  
from the Section 15E examinations conducted 
from 2016 to 2021. Of the 487 total essential 
findings arising from the Section 15E examinations 
conducted from 2016 to 2021, internal supervisory 
controls, adherence, and conflicts of interest were 
the top Section 15E Review Areas, accounting for 
42.3%, 30.6%, and 11.5%, respectively, of all 
essential findings.
The other five Section 15E Review Areas each 
accounted for less than 5% of the total essential 
findings from 2016 to 2021. Certain essential 
findings may relate to more than one Section 
15E Review Area but are categorized in only one 
category for counting purposes. For example, the 
Staff did not make any essential findings based 
solely on an NRSRO’s implementation of ethics 
policies and procedures, as such essential findings 
were accounted for in other Section 15E Review 
Areas. OCR continues to review all eight statutorily 
mandated review areas as required by Section 15E, 
described in Section III.A.
Chart 2. Essential Findings by Section 
 15E Review Area: 2016 to 2021
Internal Supervisory Controls 42.3%
Governance 4.3% 
DCO Activities 3.3%
Complaints 3.9%
Post-Employment 4.1%
Adherence 30.6%
Conflicts of Interest 11.5%
Ethics Policies 0.0%
42.3%
3.9%
3.3%
4.3%
4.1%
30.6%
11.5%
0.0%
Chart 3 shows the number of essential findings by 
Section 15E Review Area from the Section 15E 
examinations conducted from 2016 to 2021. The 
number of essential findings from the 2016 exami-
nation cycle was higher in several review areas, 
which was likely related to the new and amended 
rules that became effective in 2015.
21
 Essential 
findings have generally decreased in subsequent 
exam cycles, which indicates the NRSROs’ greater 
awareness of applicable laws and their obligations 
as regulated entities.
21 See note 21.

20    |  OFFICE OF CREDIT RATINGS 
Chart 3. Number of Essential Findings by Section 15E Review Area: 2016 to 2021
0
10
20
30
40
50
60
70
80
Post-
Employment
ComplaintsDCO
Activities
GovernanceInternal
Supervisory
Controls
Ethics
Policies
Conflicts
of Interest
Adherence
2016
201720182019
20202021
From the Section 15E examinations conducted 
from 2016 to 2021, there were 147 essential 
findings for large NRSROs, 145 essential findings 
for medium NRSROs, and 195 essential findings 
for small NRSROs.
22
 Chart 4 shows the average 
number of essential findings the large, medium,  
and small NRSROs for each examination cycle 
from 2016 to 2021. From 2016 to 2021, the large 
NRSROs had an average of 8.2 essential findings 
per exam cycle, the medium NRSROs had an 
average of 8.1 essential findings per exam cycle, 
and the small NRSROs had an average of 8.6 
essential findings per exam cycle.
Chart 4. Average Number of Essential Findings by Large, Medium, and Small NRSROs: 2016 to 2021
0
2
4
6
8
10
12
14
16
18
202120202019201820172016
Medium NRSROsSmall NRSROs
Large NRSROs
22 The number of essential findings is based on the findings identified in prior summary reports of the Staff’s examinations 
of NRSROs pursuant to Section 15E(p)(3). For purposes of this Section of the Report, MCR is considered a “small 
NRSRO” for the Section 15E examinations conducted in 2016, 2017, 2018, and 2019.

 STAFF REPORT    |  21
IV. STATE OF COMPETITION, 
TRANSPARENCY, AND 
CONFLICTS OF INTEREST
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, the 
small and medium NRSROs continue to compete 
with the large NRSROs with each increasing its 
total number of ratings outstanding as compared 
to declines among two of the large NRSROs. 
The information also suggests that some medium 
NRSROs have gained ratings share in the asset-
backed securities category. None of the small 
NRSROs is registered with the Commission in the 
asset-backed securities category.
23
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 regis-
tered.
24
 This information, for the calendar year 
ending December 31, 2020, is summarized in 
Charts 5 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 5 depicts the number of credit ratings 
each NRSRO had outstanding in each rating 
category for which it was registered as of 
December 31, 2020. 
 ■Chart 6 shows the percentage change of credit 
ratings outstanding from 2019 to 2020 for  
each NRSRO.
23 See Chart 1. As discussed in Section IV.A.2 of this Report, information available on the websites of Commercial Mortgage 
Alert (https://www.greenstreet.com/news/library/commercial-mortgage-alert) and Asset-Backed Alert (https://www.
greenstreet.com/news/library/asset-backed-alert) regarding NRSRO market shares in the asset-backed securities category 
indicates that some of the medium NRSROs have developed significant market shares in such rating category over the 
past few years. In addition, Section IV.A.2 of this Report provides examples of certain asset classes in which it has been 
reported that medium NRSROs have gained market share. 
24
 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. 

22    |  OFFICE OF CREDIT RATINGS 
 ■Chart 7 illustrates the relative size of each rating 
category based on the aggregate number of 
ratings reported outstanding by all NRSROs. 
 ■Chart 8 shows the percentage change of credit 
ratings outstanding from 2019 to 2020 for 
large NRSROs compared to small and medium 
NRSROs across all rating categories.
 ■Chart 9 depicts the percentage of ratings  
each NRSRO had outstanding across all  
rating categories other than the government 
securities category. 
 ■Chart 10 depicts the percentage of ratings each 
NRSRO had outstanding in the government 
securities category.
While comparing the number of ratings outstanding 
among NRSROs (Chart 5) illustrates one dimension 
of the current state of competition, comparing the 
number of ratings issued by such NRSROs in a 
given period provides a more real-time picture of 
competition among NRSROs. For example, certain 
NRSROs (particularly the large NRSROs) have a 
longer history of issuing ratings and their ratings 
include those for debt obligations and obligors that 
were rated well before the establishment of the 
newer entrants.
25
 Consequently, the information 
described in Section IV.A.2 of this Report (relating 
to recent market share developments in the asset-
backed securities rating category), which provides 
information about ratings issued each year since 
2019, may provide additional insight regarding 
competition 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.
26 
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 on Item 3 of Form NRSRO.
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.
27
25 The ratings counts disclosed on Item 7A of Form NRSRO include outstanding credit ratings, regardless of when they 
were issued. As a result, the ratings counts of the more established NRSROs may include credit ratings that were issued 
before the newer entrants began issuing credit ratings. 
26
 For example, AMB has traditionally focused on rating insurance companies and their affiliates.
27 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 disclosures on Item 7A of Form NRSRO 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 to Item 7A of Form NRSRO). It may be more difficult to draw rating comparisons 
to rating counts disclosed prior to January 1, 2015.

 STAFF REPORT    |  23
Chart 5 provides the number of outstanding credit 
ratings reported by each NRSRO in its annual 
certification for the calendar year ending December 
31, 2020, 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 2019 to 2020. 
Chart 6 provides a visual representation of the 
year-over-year changes in each firm’s percentage 
share of the aggregate number of NRSRO ratings 
outstanding from 2019 to 2020.
Chart 5. Number of Outstanding Credit Ratings as of December 31, 2020 by Rating Category
NRSRO
Financial 
Institutions
Insurance 
Companies
Corporate 
Issuers
Asset-
Backed 
Securities
Government 
Securities
Total 
Ratings
Year-Over-Year 
Change in  
Total Ratings  
(2019 to 2020)
AMB
N/R7,2519855N/R8,2410.82%
DBRS
11,2141924,32723,48222,55661,7716.76%
EJR
10,1199759,339N/RN/R20,43313.81%
Fitch
33,4403,19820,31834,108177,665268,729-3.42%
HR
796N/R396N/R4691,66119.41%
JCR
950862,971N/R3484,3554.61%
KBRA
1,32613222414,47014116,29313.52%
MIS
34,5402,55732,73847,411560,892678,138-0.52%
S&P
50,7986,84655,75836,821927,1441,077,3670.79%
Total143,18321,237127,056156,2971,689,2152,136,9880.20%
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.
Source: NRSRO annual certifications for the 2019 and 2020 calendar years, Item 7A on Form NRSRO.
Chart 6. Year-Over-Year Changes in Percentage Share of Total Number of Ratings Outstanding from 2019 – 2020
0.00%
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
S&PMISKBRAJCRHRFitchEJRDBRSAMB
Year-Over-Year Change
0.18%
0.11%
-0.47%
0.01%
0.01%
0.09%
-0.23%
0.30%
Percentages have been rounded to the nearest one-hundredth of one percent.
Source: NRSRO annual certifications for the 2019 and 2020 calendar years, Item 7A on Form NRSRO.

24    |  OFFICE OF CREDIT RATINGS 
Chart 7 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 registered, as
reported by each NRSRO in its annual certification 
for the calendar year ending December 31, 2020, as 
well as the percentage increase or decrease in total 
ratings from 2019 to 2020.
28
Chart 7. Percentage by Rating Category of Each NRSRO’s Outstanding Credit Ratings  
of the Total Outstanding Credit Ratings of all NRSROs as of December 31, 2020
NRSRO
Financial 
Institutions
Insurance 
Companies
Corporate 
Issuers
Asset-
Backed 
Securities
Government 
Securities
Total Ratings
Change in 
% of Total 
Ratings from 
2019 to 2020
AMB 
N/R34.1%0.8%0.0%N/R0.4%0.00%
DBRS
7.8%0.9%3.4%15.0%1.3%2.9%0.18%
EJR 
7.1 %4.6%7.4%N/RN/R1.0%0.11%
Fitch
23.4%15.1%16.0%21.8%10.5%12.6%-0.47%
HR
0.6%N/R0.3%N/R0.0%0.1%0.01%
JCR
0.7%0.4%2.3%N/R0.0%0.2%0.01%
KBRA
0.9%0.6%0.2%9.3%0.0%0.8%0.09%
MIS 
24.1%12.0%25.8%30.3%33.2%31.7%-0.23%
S&P
35.5%32.2%43.9%23.6%54.9%50.4%0.30%
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-tenth of one percent and nearest one-hundredth of one percent 
with respect to the change from 2019 to 2020.
Source: NRSRO annual certifications for the 2019 and 2020 calendar years, Item 7A on Form NRSRO.
The large NRSROs accounted for 94.7% of 
all the ratings outstanding as of December 31, 
2020—slightly lower than their 95.1% share as 
of December 31, 2019.
29
 The share of outstanding 
credit ratings of the large NRSROs decreased in all
five categories, most significantly in the financial 
institutions, corporate issuers, and asset-backed 
securities categories, which each decreased by at 
least 1.5 percentage points.
28 For example, according to Chart 5, AMB reported that it had 7,251 insurance company credit ratings, and the total 
of the credit ratings in that category reported by all NRSROs was 21,237. Therefore, the percentage of NRSRO 
insurance company ratings attributable to AMB was approximately 34.1% (i.e., 7,251 divided by 21,237, expressed as a 
percentage), as shown on Chart 7.
29
 In 2007, the year when NRSROs began reporting outstanding ratings on Form NRSRO, the large NRSROs accounted 
for 98.8% of all outstanding ratings.

 STAFF REPORT    |  25
Charts 5 and 7 also show that AMB, one of the 
medium NRSROs, had the most credit ratings 
outstanding in the insurance category. In each of the 
past seven years, AMB reported that it had the most 
credit ratings outstanding in the insurance category.
30
Chart 8 shows the percentage change of total 
ratings outstanding per asset class from 2019 to 
2020 when comparing large NRSROs to small  
and medium NRSROs.
Chart 8. Percentage Change of Total Ratings Outstanding Per Asset Class  
2019 to 2020 – Large NRSROs Compared to Small/Medium NRSROs
-6
-4
-2
0
2
4
6
8
10
12
14
Gov't 
Securitites
(Med/Small)
Gov't
Securities
(Large)
ABD
(Med/Small)
ABS 
(Large)
Corporate 
Issuers 
(Med/Small)
Corporate 
Issuers
(Large)
Insurance
(Med/Small)
Insurance
(Large)
Financial 
Institutions
(Med/Small)
Financial
 Institutions 
(Large)
Year-Over-Year Change
-3.73%
9.55%
-0.13%
12.45%
1.46%
10.70%
-1.05%
4.73%
-1.02%
8.26%
Percentages have been rounded to the nearest one-hundredth of one percent.
Source: NRSRO annual certifications for the 2019 and 2020 calendar years, Item 7A on Form NRSRO.
30 See 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.

26    |  OFFICE OF CREDIT RATINGS 
Chart 9 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, 2020.
Chart 9. Breakdown of Ratings Reported Outstanding by 
Rating Category as of December 31, 2020
Government Securities 79.0%
Financial Institutions 6.7%
Insurance Companies 1.0%
Corporate Issuers 5.9%
Asset-Backed Securities 7.3%
79.0%
5.9%
1.0%
6.7%
7.3%
Percentages have been rounded to the nearest 
one-tenth of one percent.
Source: NRSRO annual certifications for the 2020 
calendar year, Item 7A on Form NRSRO.
As illustrated by Chart 9, as of December 31, 
2020, the largest proportion of the aggregate 
credit ratings reported to be outstanding were in 
the government securities 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 7 and Chart 12, 
is also the most concentrated rating category, with 
the large NRSROs accounting for 98.6% of all 
outstanding government ratings.
Chart 10 depicts the percentages of the credit 
ratings outstanding that are attributable to each 
NRSRO over all the rating categories, as reported 
by each NRSRO in its annual certification for the 
calendar year ending December 31, 2020. 
Chart 10. Breakdown of Ratings Reported Outstanding by 
NRSRO as of December 31, 2020
S&P 50.4%
AMB 0.4% 
DBRS 2.9%
EJR 1.0%
Fitch 12.6%
HR 0.1%
JCR 0.2%
KBRA 0.8%
MIS 31.7%
50.4%
2.9%
.04%
0.2%
12.6%
31.7%
0.8%
1.0%
0.1%
Percentages have been rounded to the nearest 
one-tenth of one percent.
Source: NRSRO annual certifications for the 2020 
calendar year, Item 7A on Form NRSRO.

 STAFF REPORT    |  27
Chart 11 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, as reported 
by each NRSRO in its annual certification for the 
calendar year ending December 31, 2020.
Chart 11. Breakdown of Non-Government Securities 
Ratings Reported Outstanding by NRSRO as of  
December 31, 2020
S&P 33.5%
AMB 1.8% 
DBRS 8.8%
EJR 4.6%
Fitch 20.3%
HR 0.3%
JCR 0.9%
KBRA 3.6%
MIS 26.2%
33.5%
8.8%
1.8%
0.9%
20.3%
26.2%
3.6%
4.6%
0.3%
Percentages have been rounded to the nearest 
one-tenth of one percent.
Source: NRSRO annual certifications for the 2020 
calendar year, Item 7A on Form NRSRO.
Chart 12 depicts the percentages of the credit 
ratings outstanding that are attributable to each 
applicable NRSRO in the government securities 
category, as reported by each NRSRO in its annual 
certification for the calendar year ending December 
31, 2020.
Chart 12. Breakdown of Government Securities Ratings 
Reported Outstanding on December 31, 2020
S&P 54.89%
DBRS 1.34%
Fitch 10.52%
HR 0.03%
JCR 0.02%
KBRA 0.01%
MIS 33.20%
54.89%
1.34%
0.02%
10.52%
33.20%
0.03%
0.01%
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.
Source: NRSRO annual certifications for the 2020 
calendar year, Item 7A on Form NRSRO.
A comparison of Chart 10 to Chart 11 illus-
trates that there is less concentration in the 
non-government securities rating categories. S&P’s 
and MIS’s percentage share of all outstanding 
ratings declines by 16.9 and 5.5 percentage points, 
respectively, when government securities are 
excluded. Fitch’s percentage share of outstanding 
ratings, on the other hand, increases by 7.8 
percentage points when government securities 
are excluded. The percentage share for all 
the remaining NRSROs also increases when 
government securities are excluded. Chart 10  

28    |  OFFICE OF CREDIT RATINGS 
again shows that the government securities 
category makes up the largest number of credit 
ratings reported across all categories and is the 
most concentrated within the three large NRSROs.
Further, when government securities are included 
in the total calculation, each of the small and 
medium NRSROs, except for DBRS and EJR, has 
1.0% 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 the categories in which
they are active can be observed, as illustrated in 
Chart 11. The percentage share of each small and 
medium NRSRO for all rating categories other 
than government securities as of December 31, 
2020 did not change significantly compared to its 
percentage share as of December 31, 2019.
31
b. NRSRO Analytical Staffing Levels
Chart 13 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.
32
Chart 13. NRSRO Credit Analysts and Credit Analyst Supervisors
NRSRO
Credit Analysts (Including 
Credit Analyst Supervisors)
Credit Analyst 
Supervisors
% Change in Analytical Staff 
(Including Supervisors)  
from 2019 to 2020
AMB
160623.9%
DBRS
428131-9.9%
EJR
25128.7%
Fitch
1,3013311.9%
HR
631021.2%
JCR
62300.0%
KBRA
176542.3%
MIS
1,8302715.7%
S&P
1,5601220.1%
Total5,6051,0231.8%
Percentages have been rounded to the nearest one-tenth of one percent.
Source: Exhibit 8 to Form NRSRO, in effect as of each NRSRO’s annual certification for the 2020 calendar year filed 
on or before March 31, 2021.
31 A comparison of Chart 11 in this Report with Chart 5 in Section IV.A.1 of the December 2020 Annual Report (available 
at https://www.sec.gov/files/2020-annual-report-on-nrsros.pdf) shows that each small and medium NRSRO’s total 
non-government market share as of December 31, 2020 remained constant or increased modestly compared to the 
market shares as of December 31, 2019. 
32
 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).

 STAFF REPORT    |  29
The large NRSROs report employing 4,691 credit 
analysts (including supervisors), which is approxi-
mately 83.7% of the total number employed by all 
of the NRSROs. The small and medium NRSROs, 
in the aggregate, employ approximately 16.3% of 
all credit analysts employed by NRSROs.
33
 Some 
of the small NRSROs have reported significant 
increases in their analytical staff. Between the 2019 
and 2020 calendar years, the number of credit 
analysts (including credit analyst supervisors) 
employed by small NRSROs, in the aggregate, 
increased 9.5%, compared to an increase of 2.7% 
at the large NRSROs, in the aggregate. Between the 
2019 and 2020 calendar years, the number of
credit analysts (including credit analyst supervisors) 
employed by medium NRSROs, in the aggregate, 
decreased 4.6%.
34
 
c. NRSRO Revenue
Chart 14 shows the percentage of total NRSRO 
revenues since 2017 attributable to the large 
NRSROs, medium NRSROs, and small NRSROs.
35
 
With the exception of fiscal year 2020, the percent- 
age of aggregate NRSRO revenue reported by the 
large NRSROs has gradually declined over this time 
period and the percentage of total revenue reported 
by the medium and small NRSROs has correspond-
ingly gradually increased. 
Chart 14. NRSRO Fiscal Year Revenue as a Percentage of Aggregate Reported Revenue
2020201920182017
Large NRSROs
94.1%93.3%93.5%94.1%
Medium NRSROs
5.1%5.9%5.8%5.3%
Small NRSROs
0.8%0.8%0.7%0.6%
Total100.0%100.0%100.0%100.0%
Percentages have been rounded to the nearest one-tenth of one percent.
Source: Financial reports filed with the Commission under Rule 17g-3(a)(3) for the fiscal years ended 2017 through 
2020. 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.
33 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, and 17.0% of all NRSRO analysts in 2019. 
34
 As described in the December 2020 Annual Report, in 2019, DBRS and MCR combined analytical operations 
following a corporate combination. Prior to the combination, the two NRSROs had reported a total of 515 analysts 
as of December 31, 2019. At the end of 2019, the combined entity had a total of 475 analysts. At the end of 2020, the 
combined entity had a total of 428 analysts. The reduction in analytical staff at the combined entity may be the primary 
driver behind the overall reduction among the medium-sized NRSROs.
35
 Under Rule 17g-3(a)(3), each NRSRO is required to file annually with the Commission an unaudited report providing 
revenue information, including revenue from determining and maintaining credit ratings, revenue from subscribers, 
revenue from granting licenses or rights to publish credit ratings, and revenue from other services and products. These 
reports are not required to be made publicly available by the NRSROs.

30    |  OFFICE OF CREDIT RATINGS 
Further revenue information is available for 
NRSROs that are owned, in whole or in part, by 
public companies. The following information is 
from the 2020 annual reports of public companies 
with an ownership interest in an NRSRO:
 ■Moody’s Corporation, which is MIS’s parent 
company, reported a 15% increase in external 
revenue at MIS compared to 2019 results. The 
increase, according to the report, was largely 
driven by higher corporate debt issuance 
(both investment-grade and high-yield) as 
issuers bolstered liquidity positions in response 
to COVID-19 uncertainties and issued 
opportunistically for refinancing needs. The 
corporate finance group, financial institutions 
group, and public, project and infrastructure 
finance group of MIS had an increase in revenue 
compared to 2019 results. In comparison, the 
structured finance group of MIS had a decrease 
in revenue compared to 2019 results.
36
 ■S&P Global Inc. (S&P Global), which is  
S&P’s parent company, indicated that revenue 
at S&P increased by 16% compared to its 
2019 results, due to an increase in transaction 
revenue. S&P Global attributed the increase 
in S&P’s revenue to an increase in corporate 
bond ratings revenue primarily driven by higher 
corporate bond issuance in the U.S. mainly 
resulting from borrowers’ need for increased 
liquidity in light of the COVID-19-related 
economic downturn, historically low borrowing 
costs, and central bank lending actions initially 
announced at the end of the first quarter of 
2020. This was partially offset by a decrease 
in bank loan ratings revenue and structured 
finance revenues.
37
36 See Moody’s Corporation, Annual Report on Form 10-K for the year ended December 31, 2020, available at  
https://www.sec.gov/ix?doc=/Archives/edgar/data/1059556/000105955621000010/mco-20201231.htm. 
37
 See S&P Global Inc., Annual Report on Form 10-K for the year ended December 31, 2020, available at  
https://www.sec.gov/ix?doc=/Archives/edgar/data/64040/000006404021000063/spgi-20201231.htm. 

 STAFF REPORT    |  31
 ■Morningstar, Inc. (Morningstar), which is 
DBRS’s parent company, reported that for 
the year ended December 31, 2020, DBRS’s 
revenue was $207.3 million, accounting for 
14.9% of Morningstar’s consolidated revenue. 
Morningstar reported that its transaction-
based revenue grew 49.2% during 2020, 
primarily driven by the contribution of 
DBRS—approximately 59.9% of the revenue 
generated by DBRS came from one-time, 
transaction-based fees driven by its provision 
of ratings on newly issued securities, with the 
remainder comprised of recurring revenue from 
surveillance, credit research, or other services. 
Morningstar attributed strong Canadian 
corporate credit issuances as the primary driver 
of DBRS’s revenue growth for 2020.
38
Recent regulatory filings also show increases in 
revenue at MIS and S&P in the first half of 2021. 
Moody’s Corporation reported a 16% increase in 
MIS external revenue in the first half of 2021, as 
compared to the first half of 2020, due to strong 
growth mainly driven by leveraged finance
issuance as issuers refinanced existing debt and 
funded M&A activity, and increased CLO and 
commercial mortgage-backed securities (CMBS) 
activity amid favorable market conditions.
39
 S&P 
Global reported a 14% increase in S&P transaction 
revenue in the first half of 2021, as compared to 
the first half of 2020, due to an increase in bank 
loan ratings revenue driven by increased M&A 
activity and an increase in structured finance 
revenue primarily driven by increased issuance 
of U.S. CLOs, partially offset by a decrease in 
corporate bond ratings revenue driven by decreased 
investment-grade issuance volumes.
40 
Morningstar, Inc. reported a 29.4% increase 
in DBRS revenue in the first half of 2021, as 
compared to the first half of 2020, due to stronger 
issuance activity in both commercial mortgage-
backed and asset-backed securities, which offset 
lower issuance activity in the Canadian corporate 
markets. Recurring annual fees tied to surveillance, 
research, and other transaction-related services 
represented 36.5% of DBRS’s revenue in the first 
six months of 2021.
41
 
38 See Morningstar, Inc., Annual Report on Form 10-K for the year ended December 31, 2020, available at https://www.sec.
gov/ix?doc=/Archives/edgar/data/1289419/000128941921000039/morn-20201231.htm.
39
 See Moody’s Corporation, Quarterly Report on Form 10-Q for the period ended June 30, 2021, available at https://www.
sec.gov/ix?doc=/Archives/edgar/data/0001059556/000105955621000025/mco-20210630.htm.
40
 See S&P Global Inc., Quarterly Report on Form 10-Q, for the period ended June 30, 2021, available at https://www.sec.
gov/ix?doc=/Archives/edgar/data/64040/000006404021000155/spgi-20210630.htm. 
41
 See Morningstar, Inc., Quarterly Report on Form 10-Q for the period ended June 30, 2021, available at https://www.sec.
gov/ix?doc=/Archives/edgar/data/1289419/000128941921000186/morn-20210630.htm.

32    |  OFFICE OF CREDIT RATINGS 
2. Developments in the State of Competition 
Among NRSROs
a. Market Share Observations in the Asset-
Backed 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 7 indicates that, 
as of December 31, 2020, the medium NRSROs 
collectively had 24.3% of the ratings outstanding 
in the asset-backed securities rating category. 
However, the market share data discussed in 
this Section IV.A.2
42
 shows that higher market 
share percentages have been obtained by medium 
NRSROs in recent years for ratings issuance with 
respect to certain types of asset-backed securities.
This market share data continues the growth  
trend the Staff has observed since 2011 for some 
medium NRSROs in the asset-backed securities 
rating category.
43
 
Section IV.A.2.a.i and 2.a.ii below discuss 
NRSRO market share information with respect 
to certain asset-backed securities, as reported on 
the Commercial Mortgage Alert and Asset-Backed 
Alert websites.
44
 Commercial Mortgage Alert 
shares information on one category of asset-backed 
securities: CMBS.
45
 Asset-Backed Alert reports 
NRSRO market share information on three 
categories of asset-backed securities: (i) ABS;
46
  
(ii) MBS;
47
 and (iii) CLO.
48
42 Unless noted otherwise, all market share percentages in this Section IV.A.2 are based on dollar amounts of issuance. The 
information in this Section IV.A.2 is from the Asset-Backed Alert’s ABS database as of July 26, 2021.
43
 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 5, it only has five outstanding asset-backed securities 
ratings as of December 31, 2020, all of which were issued before 2019. For these reasons, this section only discusses 
observations related to DBRS, Fitch, KBRA, MIS, and S&P, which are the five NRSROs with current rating activity in the 
asset-backed securities category.
44
 See Commercial Mortgage Alert website, available at https://www.greenstreet.com/news/library/commercial-mortgage-
alert and Asset-Backed Alert website, available at https://www.greenstreet.com/news/library/asset-backed-alert. The 
information in Charts 15 through 18 is based on the Commercial Mortgage Alert’s CMBS database as of July 26, 2021, 
and the information in Charts 19 through 21 is based on the Asset-Backed Alert’s ABS database as of July 26, 2021. 
Although the information available on these websites 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.
45
 The “CMBS” category is comprised of transactions collateralized by mortgages or leases on commercial or multi-family 
income-producing properties (excluding commercial real estate collateralized debt obligations). See Commercial Mortgage 
Alert website, available at https://www.greenstreet.com/news/library/commercial-mortgage-alert. 
46
 The “ABS” category is comprised of securities that are collateralized by assets other than the following: CMBS; MBS; 
Fannie Mae and Freddie Mac issues (other than risk transfer transactions); issuances by municipalities; tax exempt 
issues; issues that are fully retained by an affiliate of the deal sponsor; commercial paper and other continuously offered 
securities such as medium-term notes; CLOs and other collateralized debt obligations; and refinancing of previously offered 
securities. See Asset-Backed Alert website, available at https://www.greenstreet.com/news/library/asset-backed-alert.
47
 The “MBS” category is comprised of securities secured by U.S. first-lien mortgages on residential properties (excluding 
Fannie Mae and Freddie Mac issues, securities secured by non-performing or re-performing mortgages, subprime 
mortgages, or mortgages financing single-family rental businesses, and refinancings of previously offered securities). See id.
48
 The “CLO” category is comprised of arbitrage collateralized loan obligations secured by broadly syndicated corporate 
loans and middle market collateralized loan obligations secured by loans to small to medium sized enterprises. See id. 

 STAFF REPORT    |  33
i. CMBS
Charts 15 through 18 provide information 
concerning U.S.
49
 CMBS ratings by NRSROs,
50
  
as reported in Commercial Mortgage Alert. 
NRSRO market share varies between the conduit 
CMBS and single-borrower CMBS segments,
51
 
the two segments that account for most of the 
non-agency
52
 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 CMBS transactions, 
U.S. single-borrower CMBS transactions, and 
agency CMBS transactions
54
 for calendar year 
2019, calendar year 2020, and the first half of 
calendar year 2021.
49 See id. 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”). Commercial Mortgage Alert website, available  
at https://www.greenstreet.com/news/library/commercial-mortgage-alert.
50
 For purposes of Charts 15 through 18, all rating activity for pre-integration DBRS, MCR, and DBRS has been aggregated 
and presented for DBRS for calendar year 2019. Please refer to the December 2020, January 2020, and December 2018 
Annual Reports for information for pre-integration DBRS and MCR, 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.
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%20Revised%202014%20-Update.pdf. In contrast, a single-borrower transaction includes commercial 
mortgage loans made to a single borrower. 
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 conduit CMBS, single-borrower CMBS, and other types of CMBS, such as 
distressed/non-performing CMBS transactions and re-securitizations of 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. See Commercial Mortgage Alert website, available at https://www.greenstreet.com/
news/library/commercial-mortgage-alert.

34    |  OFFICE OF CREDIT RATINGS 
Chart 15. Rating Agency Market Share for Total Non-Agency U.S. CMBS Issued in 2019, 2020, and First Half of 2021
1H-2021 
Rank
NRSRO
1H-2021 
Issuance  
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
2020 
Issuance 
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
2019 
Issuance 
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
1
Fitch31,1142768.1/45.838,0374664.2/52.356,0486657.3/46.2
2
KBRA23,0532050.4/33.925,8253243.6/36.445,9245647.0/39.2
3
DBRS18,3502540.1/42.421,8933436.9/38.642,4255643.4/39.2
4
MIS16,4092135.9/35.625,0764242.3/47.742,1845543.1/38.5
5
S&P15,9272334.8/39.023,2752739.3/30.749,6347050.8/49.0
Total 
Rated 
Market
45,7225959,2548897,767143
Chart 15 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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. 
Source: Based on information from the Commercial Mortgage Alert’s CMBS database as of July 26, 2021, available 
at https://www.greenstreet.com/news/library/commercial-mortgage-alert. For calendar year 2019, the Staff has 
adjusted the presentation of the information by aggregating individual pre-integration DBRS and MCR information 
to present the information consistently as a combined entity, DBRS. See note 43.
Chart 16. Rating Agency Market Share for U.S. Conduit CMBS Issued in 2019, 2020, and First Half of 2021
1H-2021 
Rank
NRSRO
1H-2021 
Issuance  
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
2020 
Issuance 
($Mil.)
No. of 
deals
Market 
Share %  
($)/(#)
2019 
Issuance 
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
1
Fitch15,18416100.0/100.026,95330100.0/100.049,15452100.0/100.0
2
KBRA12,2441380.6/81.317,4002064.6/66.732,7553666.6/69.2
3
S&P11,4091175.1/68.814,7691454.8/46.735,5823672.4/69.2
4
DBRS4,305428.4/25.09,5531035.4/33.318,3181837.2/34.6
5
MIS2,560316.9/18.811,4571542.5/50.014,8361730.2/32.7
 
Total 
Rated 
Market
15,18416 26,95330 49,15452 
Chart 16 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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.
Source: Based on information from the Commercial Mortgage Alert’s database as of July 26, 2021, available at 
https://www.greenstreet.com/news/library/commercial-mortgage-alert. For calendar year 2019, the Staff has 
adjusted the presentation of the information by aggregating individual pre-integration DBRS and MCR information 
to present the information consistently as a combined entity, DBRS. See note 43.

 STAFF REPORT    |  35
Chart 17. Rating Agency Market Share for U.S. Single-Borrower CMBS Issued in 2019, 2020, and First Half of 2021
1H-2021 
Rank
NRSRO
1H-2021 
Issuance  
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
2020 
Issuance 
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
2019 
Issuance 
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
1
Fitch15,9301152.2/25.68,5821236.1/25.56,8941415.0/16.9
2
DBRS14,0452146.0/48.810,1082042.5/42.623,3683550.7/42.2
3
MIS13,8491845.4/41.911,3882347.9/48.926,5183657.6/43.4
4
KBRA10,809735.4/16.37,231930.4/19.112,5061827.2/21.7
5
S&P4,5171214.8/27.93,154813.3/17.012,6383027.4/36.1
Total 
Rated 
Market
30,5374323,7764746,06083
Chart 17 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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.
Source: Based on information from the Commercial Mortgage Alert’s CMBS database as of July 26, 2021, available 
at https://www.greenstreet.com/news/library/commercial-mortgage-alert. For calendar year 2019, the Staff has 
adjusted the presentation of the information by aggregating individual pre-integration DBRS and MCR information 
to present the information consistently as a combined entity, DBRS. See note 43.
Chart 18. Rating Agency Market Share for Agency CMBS Issued in 2019, 2020, and First Half of 2021
1H-2021 
Rank
NRSRO
1H-2021 
Issuance  
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
2020 
Issuance 
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
2019 
Issuance 
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
1
Fitch12,27510100.0/100.026,8202190.9/91.316,7671259.2/60.0
2
DBRS8,954772.9/70.015,0111250.9/52.215,9951156.5/55.0
3
KBRA3,322327.1/30.014,4801149.1/47.812,311943.5/45.0
4
MIS000.0/0.02,67129.1/8.75,862420.7/20.0
5
S&P000.0/0.0000.0/0.05,677420.1/20.0
Total 
Rated 
Market
12,2751029,4912328,30620
Chart 18 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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.
Source: Based on information from the Commercial Mortgage Alert’s CMBS database as of July 26, 2021, available 
at https://www.greenstreet.com/news/library/commercial-mortgage-alert. For calendar year 2019, the Staff has 
adjusted the presentation of the information by aggregating individual pre-integration DBRS and MCR information 
to present the information consistently as a combined entity, DBRS. See note 43.

36    |  OFFICE OF CREDIT RATINGS 
Charts 15 through 17 show that in 2019, 2020, and 
the first half of 2021 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.
55
 
As illustrated in Chart 15, in the first half of 2021, 
KBRA and DBRS had the second and third-highest 
market shares, respectively, in the non-agency U.S. 
CMBS segment. KBRA has consistently attained 
a market share of at least 43% in each of 2019, 
2020, and the first half of 2021, and DBRS has 
attained a market share of over 36% during the 
same time period.
The relative size of the U.S. conduit CMBS segment 
had been about half of the non-agency U.S. CMBS 
transactions in 2019 and 2020. In the first half 
of 2021, the U.S. conduit segment accounted for 
about a third of all non-agency U.S. CMBS trans-
actions.
56
 Fitch has continued to maintain market 
share in the U.S. conduit CMBS segment.
As illustrated in Chart 16, Fitch had the highest 
market share, measured by dollar value of issuance, 
in this segment during 2019, 2020, and the first 
half of 2021, rating all of the transactions over that 
period. KBRA had the third-highest market share, 
measured by dollar value of issuance, in the U.S. 
conduit CMBS segment in 2019, and the second-
highest ranking in 2020 and the first half of 2021. 
In each of 2017, 2018, 2019, 2020, and the first 
half of 2021, KBRA has rated more than half of 
these transactions. 
The relative size of the U.S. single-borrower segment 
was over 40% of the non-agency U.S. CMBS 
transactions in 2019 and 2020. In the first half of 
2021, the U.S. single-borrower segment accounted 
for about two-thirds of all non-agency U.S. CMBS 
transactions.
57
 DBRS gained market share in this 
segment, achieving the second highest market share 
in the first half of 2021, rating twenty-one of the 
forty-three transactions in the segment. 
55 Non-agency U.S. CMBS issuance came to a near halt in March 2020 because of COVID-19. Issuance began to pick-up 
in the third and fourth quarters of 2020, but overall issuance in 2020 was down nearly 40% from 2019 due to 
COVID-19 and the resulting economic impact. See S&P Loses to Moody’s, Commercial Mortgage Alert, Jan. 22, 2021; 
CMBS Issuance Off 27% Year-Over-Year, Commercial Mortgage Alert, Oct. 2, 2020. Non-agency U.S. CMBS issuance 
continued to grow in the first half of 2021, with U.S. conduit CMBS transactions accounting for approximately 33% and 
U.S. single-borrower transactions accounting for 67%. See CMBS, CLO Issuers Prep for Busier 2nd Half, Commercial 
Mortgage Alert, July 9, 2021.
56
 U.S. conduit CMBS issuance has resumed, albeit more slowly than other non-agency U.S. CMBS segments, because it 
takes more time and effort than it did before COVID-19 to aggregate enough collateral for a transaction—investors 
continue to shy away from offerings that are backed by more than minimal amounts of loans on hotel and retail 
properties, which have suffered as a result of COVID-19. See CMBS, CLO Issuers Prep for Busier 2nd Half, Commercial 
Mortgage Alert, July 9, 2021; Election Day Looms Large for CMBS Issuers, Commercial Mortgage Alert, Oct. 2, 2020. 
57
 U.S. single-borrower sector issuance resumed in the third quarter of 2020 and continued to grow in the first half of 
2021 as lenders and investors have been attracted to securitizations of large loans tied to prominent borrowers and/or 
significant properties and portfolios during COVID-19. See CMBS, CLO Issuers Prep for Busier 2nd Half, Commercial 
Mortgage Alert, July 9, 2021; Election Day Looms Large for CMBS Issuers, Commercial Mortgage Alert, Oct. 2, 2020. 

 STAFF REPORT    |  37
As illustrated in Chart 18, Fitch has continued 
to improve its market share in the agency CMBS 
segment. Fitch had the highest market share in 
this segment during 2019, 2020, and the first half 
of 2021. Over the same period, DBRS and KBRA 
had the second and third-highest market shares, 
respectively, in the agency CMBS segment.
ii. ABS/MBS/CLO
Charts 19 through 21 provide information 
concerning U.S. ABS, U.S. MBS, and U.S. CLO 
ratings by NRSROs,
58
 as reported in Asset-Backed 
Alert. The charts include reported market share 
information for these transactions for calendar 
years 2019, calendar year 2020, and the first half 
of calendar year 2021. 
Chart 19. Rating Agency Market Shares for U.S. ABS Issued in 2019, 2020, and First Half of 2021
1H-2021 
Rank
NRSRO
1H-2021 
Issuance  
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
2020 
Issuance 
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
2019 
Issuance 
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
1
S&P92,74114849.5/45.7159,39623958.3/47.9193,37831757.6/53.9
2
MIS88,5849747.3/29.9114,38315741.8/31.5143,74220342.8/34.5
3
Fitch63,9548534.1/26.2109,28615140.0/30.3151,09019245.0/32.7
4
DBRS61,93311133.1/34.376,12116827.8/33.7107,08620131.9/34.2
5
KBRA40,53810821.6/33.350,22813718.4/27.564,90917719.3/30.1
Total 
Rated 
Market
187,300324273,360499335,931588
Chart 19 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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.
Source: Based on information from the Asset-Backed Alert’s ABS database as of July 26, 2021, available at  
https://www.greenstreet.com/news/library/asset-backed-alert. For calendar year 2019, the Staff has adjusted  
the presentation of the information by aggregating individual pre-integration DBRS and MCR information to  
present the information consistently as a combined entity, DBRS. See note 51.
58 For purposes of Charts 19 through 21, all rating activity for pre-integration DBRS, MCR, and DBRS has been aggregated 
and presented for DBRS for calendar year 2019. Please refer to the December 2020, January 2020, and December 2018 
Annual Reports for information for pre-integration DBRS and MCR, 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.

38    |  OFFICE OF CREDIT RATINGS 
Chart 20. Rating Agency Market Shares for U.S. MBS Issued in 2019, 2020, and First Half of 2021
1H-2021 
Rank
NRSRO
1H-2021 
Issuance  
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
2020 
Issuance 
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
2019 
Issuance 
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
1
Fitch21,9204868.1/66.714,7554648.9/57.58,6642931.0/38.2
2
MIS21,8613967.9/54.214,6423148.6/38.819,0744468.3/57.9
3
KBRA9,0512228.1/30.610,5762535.1/31.313,1263347.0/43.4
4
DBRS3,09279.6/9.710,8102435.9/30.011,6792641.8/34.2
5
S&P2,30667.2/8.32,75689.1/10.02,43358.7/6.6
Total 
Rated 
Market
32,2037230,1488027,94176
Chart 20 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The 
sum of the market share percentages exceeds 100% because more than one NRSRO may rate a particular trans-
action. Likewise, the aggregate issuance volume and number of deals represented above exceed the Total Rated 
Market values for each time period. 
Source: Based on information from the Asset-Backed Alert’s ABS database as of July 26, 2021, available at  
https://www.greenstreet.com/news/library/asset-backed-alert. For calendar year 2019, the Staff has adjusted the 
presentation of the information by aggregating individual pre-integration DBRS and MCR information to present the 
information consistently as a combined entity, DBRS. See note 51.
Chart 21. Rating Agency Market Shares for U.S. CLO Issued in First Half of 2019, 2020, and First Half of 2021
1H-2021 
Rank
NRSRO
1H-2021 
Issuance  
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
2020 
Issuance 
($Mil.)
No. of 
deals
Market 
Share % 
($)/(#)
2019 
Issuance 
($Mil.)
No. of 
deals
Market  
Share % 
($)/(#)
1
S&P56,82411966.9/68.081,58919387.0/86.273,79115260.1/58.5
2
MIS31,7466537. 4/ 37.118,8904520.1/20.173,53815559.9/59.6
3
Fitch16,8783419.9/19.432,8157235.0/32.179,88916665.1/63.8
4
KBRA6,066127.1/6093,541103.8/4.55,678134.6/5.0
5
DBRS2,58833.0/1.733010.4/0.43,42482.8/3.1
Total 
Rated 
Market
84,98317593,785224122,716260
Chart 21 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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. 
Source: Based on information from the Asset-Backed Alert’s ABS database as of July 26, 2021, available at  
https://www.greenstreet.com/news/library/asset-backed-alert. For calendar year 2019, the Staff has adjusted the 
presentation of the information by aggregating individual pre-integration DBRS and MCR information to present the 
information consistently as a combined entity, DBRS. See note 51.

 STAFF REPORT    |  39
Chart 19 shows that DBRS and KBRA have built 
and maintained significant U.S. ABS rating market 
shares.
59
 DBRS has consistently attained a market 
share of over 27% in each of 2019, 2020, and the 
first half of 2021, and KBRA has attained a market 
share of over 18% during the same time period.
60
 
For example, DBRS has been able to gain market 
share in rating more traditional types of asset-
backed securities (aside from the MBS and CMBS 
categories). As another example, DBRS rated 
95.1% of the transactions backed by student loans 
that priced during the first half of 2021.
61
 DBRS 
also rated 34.1% of the transactions backed by 
credit card transactions (one of the larger classes of 
asset-backed securities) that priced during the first 
half of 2021.
62
 DBRS has also been able to gain 
market share in auto-related asset-backed securities, 
rating 55.7% of the auto-fleet lease transactions, 
22.2% of the subprime auto loan transactions, 
5.6% of the prime auto loan transactions, and 
19.0% of the auto lease transactions that priced 
during the first half of 2021.
63
 KBRA has also 
established a market share in some of these 
auto-related asset-backed security categories, rating 
32% of the subprime auto loan transactions and 
3% of the prime auto loan transactions that priced 
during the first half of 2021.
64
 Chart 20 shows that 
the highest market shares for the U.S. MBS segment 
have been achieved by two of the large NRSROs. 
KBRA and DBRS had achieved market shares of 
over 40% in this segment in 2019, but have since 
seen their market share decrease in 2020 and the 
first half of 2021. DBRS and KBRA have, however, 
achieved notable market share in certain types of 
residential mortgage-backed securities not included 
in Chart 20. For example, DBRS rated 69% of the
59 See also Section IV.A.2 of this Report for a discussion of additional ABS asset classes where these two NRSROs have 
reported success in gaining market share. 
60
 There was a significant reduction in U.S. ABS issuance volume in the second quarter of 2020 as COVID-19 caused vast 
financial market disruptions. Issuance began to resume in the third quarter of 2020, but overall U.S. ABS issuance in 2020 
was down nearly 19% from 2019 due to COVID-19. See After Bleak Year, Pros Eye Issuance Rebound, Asset-Backed 
Alert, Jan. 8, 2021; Worldwide Issuance Rebound Falling Flat, Asset-Backed Alert, Oct. 2, 2020. U.S. ABS issuance has 
been strong in the first half of 2021, with issuance up 52% from a year ago. See Second Half Kicking Off on $1 Trillion 
Tempo, Asset-Backed Alert, July 9, 2021; Worldwide Issuance On Pace for Banner Year, Asset-Backed Alert, Apr. 9, 2021.
61
 See Asset-Backed Alert’s ABS database indicates that twenty-three student loan transactions totaling $17.6 billion priced 
during the first half of 2021.
62
      The      Asset-Backed Alert database lists 12 credit card transactions totaling $5.5 billion that priced during the first half of 
2021.
63
 See Asset-Backed Alert’s ABS database, which indicates that the following transactions were priced during the first  
half of 2021: 10 auto-fleet lease transactions totaling $8.9 billion, 32 subprime auto loan transactions totaling $20.7 
billion, 48 prime auto loan transactions totaling $44.3 billion, and 28 auto lease transactions totaling $25.7 billion.
64
 See id.

40    |  OFFICE OF CREDIT RATINGS 
re-performing mortgage transactions that priced 
in the first half of 2021.
65
 Additionally, DBRS 
and KBRA were active rating securities backed by 
subprime mortgages and risk transfer securities 
during the first half of 2021. For securities backed 
by subprime mortgages, DBRS rated 32% and 
KBRA rated 28% that priced during the first half 
of 2021;
66
 for risk transfer securities, DBRS rated 
50% and KBRA rated 14% that priced during the 
first half of 2021.
67
Chart 21 shows that the large NRSROs have the 
highest, second highest, and third highest market 
shares in the U.S. CLO segment. However, DBRS 
and KBRA have attained some market share in the 
U.S. CLO segment.
b. Market Share Observations in Other Asset-
Backed Securities Classes
While the large NRSROs maintain a large market 
share in some newer or more esoteric asset-backed 
securities asset classes, DBRS and KBRA have 
gained significant market share in these areas,  
as well.
For instance, 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 the first half of 2021, both rating over 53% 
of the transactions priced during such period.
68
 
Comparatively, MIS and S&P each rated less  
than 30% of these transactions for the same  
time period.
69
Another example of market share gains achieved 
by a medium NRSRO in a discrete asset class 
is KBRA’s rating of securitizations backed by 
aircraft-lease receivables. KBRA rated 85.0% of the 
aircraft-lease receivables transactions that priced 
during the first half of 2021, while MIS and S&P 
rated 63.4% and 29.1%, respectively, of these 
transactions for the same time period.
70
 KBRA has 
rated sixty-four of the sixty-six, or 97.0%, of the 
aircraft-lease receivables transactions issued from 
December 2015 through the end of the second 
quarter of 2021.
71
65 See Asset-Backed Alert’s ABS database, which indicates that fourteen re-performing mortgage-backed securities 
transactions totaling $8.5 billion priced during the first half of 2021. 
66
 See Asset-Backed Alert’s ABS database, which indicates that forty-two subprime mortgage-backed securities transactions 
totaling $11.6 billion priced during the first half of 2021.
67
 See Asset-Backed Alert’s ABS database, which indicates that twenty-one risk transfer transactions totaling $13.0 billion 
priced during the first half of 2021.
68
 See Asset-Backed Alert’s ABS database, which indicates that thirty unsecured consumer loan transactions totaling  
$10.4 billion priced during the first half of 2021. 
69
 See id.
70
 See Asset-Backed Alert’s ABS database, which indicates that eight aircraft-lease receivables transactions totaling  
$4.1 billion priced during the first half of 2021. 
71
 See id.

 STAFF REPORT    |  41
KBRA was also active rating whole-business securi-
tizations during the first half of 2021, rating 45.5% 
of the issuance amount of such transactions.
72
 
While MIS had a greater market share for this time 
period (rating 65% of the transactions), KBRA’s 
gain in the whole-business category is further 
demonstrated when measured by the number 
of transactions rather than dollar amounts of 
issuance; KBRA rated six of the nine transactions 
priced during the first half of 2021.
73
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.
74
 The effect of these 
requirements can be to increase the demand for and 
liquidity of securities bearing the ratings of specified 
rating agencies. Historically, many of these guide-
lines refer to the ratings from the large NRSROs by 
name (i.e., Fitch, MIS, and S&P). Despite reports 
in recent years that investors are increasingly 
changing their guidelines to allow for investments 
in securities rated by a wider group of NRSROs,
75
 
investment guidelines continue to be identified as a 
factor impacting the selection of NRSROs to rate 
certain transactions.
76
 
A related barrier to entry is the inclusion require-
ments 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, and can thus increase the demand for 
securities bearing the ratings of particular
72 See Asset-Backed Alert’s ABS database, which indicates that nine whole-business securitization transactions totaling $6.1 
billion priced during the first half of 2021. DBRS rated one whole-business securitization transaction representing 7.0% 
of the issuance amount of such transactions priced during the first half of 2021. Fitch rated 5.9% of the issuance amount 
of the whole-business transactions during the same time period.
73
 See id.
74
 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. This barrier to entry was also mentioned during the SEC’s Credit Ratings Roundtable held on May 14, 
2013. At the roundtable, a representative of a former NRSRO mentioned that, according to a study conducted by the 
former NRSRO, approximately 42% of open-end fixed income funds with investment guidelines that reference ratings 
specifically refer to S&P, MIS, or a “major NRSRO.” See Credit Rating Roundtable, May 14, 2013, available at  
https://www.sec.gov/spotlight/credit-ratings-roundtable.shtml. 
75
 See, e.g., Big Investors Accept More Rating Agencies, Asset-Backed Alert, May 19, 2017.
76
 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.

42    |  OFFICE OF CREDIT RATINGS 
NRSROs.
77
 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.
78
Market participants and academics have identified 
various other barriers to entry in the credit rating 
industry, including economic and regulatory 
barriers.
79
 Among the regulatory barriers to entry 
for NRSROs are the potential challenges associated 
with complying with the statutory provisions 
included in the Rating Agency Act, such as the 
requirement in Section 15E(a)(1)(C) to furnish 
written certifications from qualified institutional 
buyers, and the costs associated with the Dodd-
Frank Act and the related rules and rule amend-
ments adopted by the Commission (the NRSRO 
Amendments).
80
 When the Commission issued
the proposed 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.
81
 In connection with the adoption of the 
NRSRO Amendments, the Commission acknowl-
edged 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 competi-
tion.
82
 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.
83
 
77 See, e.g., Rating Firms Seek Changes to Index, Asset-Backed Alert, May 26, 2017.
78
 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.
79
 See, e.g., Section IV.C of the March 2012 Annual Report, available at https://www.sec.gov/divisions/marketreg/
ratingagency/nrsroannrep0312.pdf; Fitch Assigns ‘A-’ Rating to S&P’s Senior Unsecured Notes Offering, Outlook Stable, 
Fitch Ratings, Aug. 10, 2020; Fitch Assigns ‘BBB+’ Rating to Moody’s Senior Unsecured Notes Offering, Outlook Stable, 
Fitch Ratings, Aug. 4, 2020.
80
 See 2014 Adopting Release, 79 FR 55078 (Sept. 15, 2014), available at https://www.govinfo.gov/content/pkg/FR-2014-
09-15/pdf/2014-20890.pdf.
81
 See 2014 Adopting Release, 79 FR at 55090, 55154, 55161, and 55254-55. 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.
82
 See 2014 Adopting Release, 79 FR at 55254.
83
 See Section IV.C of the December 2015 Annual Report, available at https://www.sec.gov/ocr/reportspubs/annual-
reports/2015-annual-report-on-nrsros.pdf.

 STAFF REPORT    |  43
Additionally, there are provisions for exemptions 
built into several rules and statutes that relate to 
small and medium NRSROs, if the Commission 
deems that these requirements may impose an 
unreasonable burden on the NRSRO. NRSROs 
may also request exemptions under Section 36 to 
other rules and statutes that do not have exemp-
tions built into them.
84
 
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.”
85
 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 method-
ologies, business practices, and credit ratings 
performance. Under Exchange Act rules, NRSROs 
are required to disclose:
 ■Standardized performance statistics;
86
 ■Consolidated information about credit rating 
histories;
87
 ■Information about material changes and signif-
icant errors in the procedures and methodologies 
used to determine credit ratings;
88
 ■Information about specific rating actions;
89
 and 
 ■Clear definitions of each symbol, number, or 
score in the rating scale used by the NRSRO.
90
NRSROs must also disclose certain information in 
connection with each rating action.
91
 Such infor-
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
84 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.
85
 See the preamble to the Rating Agency Act. 
86
 See Instructions for Exhibit 1 to Form NRSRO. 
87
 See Rule 17g-7(b). 
88
 See Rule 17g-8(a)(4). 
89
 See Rule 17g-7(a). 
90
 See Rule 17g-8(b)(2).
91
 See Rule 17g-7(a). 

44    |  OFFICE OF CREDIT RATINGS 
that were relied upon for purposes of determining 
the credit rating, an assessment of the quality of 
information available and considered in deter-
mining the credit rating, and information on the 
sensitivity of the credit ratings to assumptions made 
by the NRSRO.
92
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.
93
 The avail-
ability 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.
NRSROs may also provide transparency to the 
extent they publish commentaries or research. 
NRSROs publish commentaries and research  
that generally include data, analyses, or projec- 
tions on market sectors and economic outlooks.
94
 
These publications may be helpful to investors 
to understand industry trends and the NRSROs’ 
credit views.
For example, following the emergence of 
COVID-19 in early 2020, NRSROs began 
publishing commentaries and research that provide 
their perspectives on the potential credit and 
rating impacts of COVID-19 on issuers and debt 
obligations in different market sectors. They also 
began publishing COVID-19-related commen-
taries on economic and market trends. KBRA 
published research discussing valuation declines 
in distressed commercial real estate properties in 
CMBS transactions during COVID-19.
95
 A DBRS 
report examining how the self-storage industry has 
fared during COVID-19 describes how the self-
storage industry had been growing steadily prior 
to COVID-19 and remained resilient as pandemic 
related restrictions persisted, in contrast to certain 
other types of commercial real estate properties, 
including those in the hotel and non-essential  
retail sectors.
96
92 See Rule 17g-7(a)(1)(ii). 
93
 The reports accompanying a rating action are frequently available on a paid subscription basis, although some NRSROs 
provide access to such reports for free.
94
 NRSROs may also make market and economic data separately available.
95 See KBRA, Appraisals for Distressed CRE Continue to Trend Lower in COVID’s Wake (May 18, 2021), available at  
https://www.kbra.com/documents/report/48884/appraisals-for-distressed-cre-continue-to-trend-lower-in-covid-s-wake.
96
 See DBRS, Self-Storage in the Pandemic: People Need Their Space (Aug. 23, 2021), available at https://www.
dbrsmorningstar.com/research/383322/self-storage-in-the-pandemic-people-need-their-space.

 STAFF REPORT    |  45
NRSROs have also produced research in recent 
years regarding their views on ESG matters and 
how they incorporate ESG considerations in 
their credit rating actions. For example, DBRS 
published research discussing the potential impact 
of climate change on portfolios of renewable and 
gas-based power plants and how, in some power 
markets, increases in green power generation 
entails risks, such as power supply volatility due to 
more frequent weather-related outages caused by 
climate change.
97
 KBRA also published research 
regarding how it views the consideration of ESG 
issues in credit analysis and why it does not deploy 
subjective value-based ESG scoring rubrics. KBRA 
indicated that it believes that ESG factors that 
impact credit risk need better disclosure and are 
best examined through the lens of risk management 
analysis for corporate, financial institution, and 
government debt issues and issuers.
98
Between 2016 and 2021, several of the Section 
15E Review Areas discussed in Section III above, 
including adherence to policies, procedures, and 
methodologies, conflicts of interest, internal
supervisory controls, DCO activities, and post-
employment activities, included examination 
findings that addressed transparency-related issues. 
In total, there were 172 transparency-related 
findings, accounting for approximately 39% of all 
essential findings, in the Section 15E examinations 
conducted from 2016 to 2021. On average, each 
Section 15E examination cycle from 2016 to 2021 
included 29 transparency-related essential findings. 
For the 2020 and 2021 examinations specifically, 
transparency-related essential findings accounted 
for 16 and 18 essential findings, respectively.
C. CONFLICTS OF INTEREST
NRSROs operate under one or more business 
models, each having potential conflicts of interest. 
Most of the NRSROs primarily operate under the 
“issuer-pay” model, which is subject to a potential 
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 “subscriber-pay” model, under  
which investors pay a subscription fee to access 
97 See DBRS, Impact of Climate Change on Renewable and Natural Gas-Fired Power Generation Assets (Oct. 4, 2021), 
available at https://www.dbrsmorningstar.com/research/385386/impact-of-climate-change-on-renewable-and-natural-gas-
fired-power-generation-assets. 
98
 See KBRA, Credit Ratings Deserve ESG Risk Analysis, Not ESG Scores (Feb. 3, 2021), available at https://www.kbra.
com/documents/report/44260/credit-ratings-deserve-esg-risk-analysis-not-esg-scores. 

46    |  OFFICE OF CREDIT RATINGS 
an NRSRO’s ratings. This model is also subject 
to potential 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 invests in newly issued bonds and  
would obtain higher yields if the bonds were to 
have lower ratings.
Section 15E and the related Commission rules 
address conflicts of interest.
99
 For example, Rule 
17g-5 identifies certain conflicts of interest that are 
prohibited under all circumstances
100
 and other 
conflicts of interest that are prohibited unless an 
NRSRO has publicly disclosed the existence of the 
conflict and has implemented policies and proce-
dures reasonably designed to address and manage 
such conflict.
101
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 for a person where an 
employee of the NRSRO that participated in deter-
mining, 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.
102
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 consider-
ations.
103
 In May 2020, the Commission instituted 
settled administrative proceedings against MCR for 
issuing or maintaining credit ratings where MCR 
employees who participated in determining or 
monitoring the credit ratings also participated in the 
sales or marketing of a product or service of MCR, 
in violation of Rule 17g-5(c)(8)(i).
104
Other statutory provisions and Commission rules 
address potential 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.
105
 Rule 17g-8(c) requires 
an NRSRO’s policies and procedures to address 
instances in which a “look-back” review deter-
mined that a conflict of interest influenced a credit
99 See, e.g., Section 15E(h) and Rule 17g-5. 
100
 See Rule 17g-5(c).
101
 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.
102
 See Rule 17g-5(c)(2) and Rule 17g-5(c)(4).
103
 See Rule 17g-5(c)(8).
104
 See In re Morningstar Credit Ratings, LLC, Exch. Act Rel. No. 88880 (May 15, 2020) (settled action), available at  
https://www.sec.gov/litigation/admin/2020/34-88880.pdf. 
105
 See Section 15E(h)(4)(A).

 STAFF REPORT    |  47
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.
106
One of the conflict of interest rules concerns the 
issuer-pay conflict of interest relating to struc-
tured finance products. The Commission adopted 
Rule 17g-5(a)(3) in 2009 to address this conflict 
of interest. An exemption was in effect for Rule 
17g-5(a)(3) with regard to structured finance 
products issued by non-U.S. issuers in transactions 
outside the United States until the Commission 
codified the exemption in August 2019. In the 
adopting release, the Commission directed the 
Staff to further evaluate the effectiveness of Rule 
17g-5(a)(3) with respect to ratings of structured 
finance products that are not eligible for relief 
under the adopted exemption.
107
 Towards this end, 
in a February 2020 speech, then OCR Director
Jessica Kane welcomed input and engagement 
from all interested parties on the effectiveness of 
Rule 17g-5(a)(3).
108
 In the May 26, 2021 hearing 
before the House Appropriations Subcommittee 
on Financial Services and General Government, 
SEC Chair Gary Gensler testified that he has asked 
the Staff to take a fresh look at the Staff’s prior 
work on the issuer-pay conflict to assess if there are 
further modifications to be done.
109
As discussed in Section III.C.5 of this Report, 
conflicts of interest accounted for 11.5% of all 
essential findings from the Section 15E examina-
tions conducted from 2016 to 2021. As Chart 3 
shows, conflicts of interest accounted for 19 of the 
essential findings from the 2016 to 2021 exami-
nations.
110
 Conflicts of interest have accounted for 
approximately seven essential findings for each 
examination, on average, from 2017 to 2021. 
For the 2020 and 2021 examinations, conflicts 
of interest accounted for five and four essential 
findings, respectively.
106 See Rule 17g-8(c). 
107
 See Amendments to Rules for Nationally Recognized Statistical Rating Organizations, Release No. 34-86590 (Aug. 7, 
2019), 84 FR 40247, 40250 (Aug. 14, 2019) (“2019 Adopting Release”), available at https://www.govinfo.gov/content/
pkg/FR-2019-08-14/pdf/2019-17218.pdf.
108
 See Jessica Kane, Speech, The SEC’s Office of Credit Ratings and NRSRO Regulation: Past, Present, and Future  
(Feb. 24, 2020), available at https://www.sec.gov/news/speech/speech-jessica-kane-2020-02-24. OCR then-Director 
Jessica Kane delivered a speech describing the NRSRO regulatory framework and certain regulatory requirements;  
OCR’s responsibility for administering this regulatory framework; and observed trends in NRSRO compliance. The 
speech referenced the Commission’s 2019 Adopting Release and invited interested parties to provide input on the 
effectiveness of Rule 17g-5(a)(3). 
109
 See Securities and Exchange Commission Oversight Hearing Before the Subcommittee on Financial Services and  
General Government of the House Committee on Appropriations, 117th Congress (May 26, 2021), available at  
https://appropriations.house.gov/events/hearings/securities-and-exchange-commission-oversight-hearing.
110
 This was likely related to the new and amended rules that became effective in 2015. See note 21.

48    |  OFFICE OF CREDIT RATINGS 

 STAFF REPORT    |  49
V. ACTIVITIES  
RELATING TO NRSROs
A. COMMISSION ORDERS  
AND RELEASES
T
he Commission issued the following orders 
and releases relating to NRSROs or credit 
ratings in general during the Report Period:
 ■In re DBRS, Inc., Exch. Act Rel. No. 92952 
(Sept. 13, 2021) (settled action).
111
 The 
Commission instituted settled administrative 
proceedings against DBRS concerning violations 
of Rule 17g-8(b)(1) in connection with rating 
CLO Combo Notes.
112
 The SEC’s order finds 
that DBRS’s policies and procedures were not 
reasonably designed to ensure that it rated CLO 
Combo Notes in accordance with the terms of 
those securities.
 ■Continuance of Exemption Pursuant to Order 
Granting Temporary Conditional Exemption 
for Japan Credit Rating Agency, Ltd. from 
Certain Requirements of Section 15E(t) of 
the Securities Exchange Act of 1934.
113
 On 
August 17, 2018, the Commission granted 
JCR a temporary, conditional exemption from 
certain corporate governance requirements 
under Section 15E(t). On August 20, 2021, the 
exemption automatically renewed until August 
20, 2023.
114
 
 ■SEC v. Morningstar Credit Ratings, LLC, No. 
1:21-cv-1359 (S.D.N.Y. filed Feb. 16, 2021).
115
 
The Commission filed a civil action alleging that 
former credit rating agency Morningstar Credit 
Ratings, LLC, violated disclosure and internal 
controls provisions of Section 15E and the rules 
promulgated thereunder in rating CMBS.
116
111 Available at https://www.sec.gov/litigation/admin/2021/34-92952.pdf. 
112
 See https://www.sec.gov/enforce/34-92952-s.
113
 Release No. 34-83884 (Aug. 17, 2018), available at https://www.sec.gov/rules/exorders/2018/34-83884.pdf. 
114
 See id.
115
 Available at https://www.sec.gov/litigation/complaints/2021/comp-pr2021-29.pdf.
116
 See https://www.sec.gov/news/press-release/2021-29.

50    |  OFFICE OF CREDIT RATINGS 
B. STAFF PUBLICATIONS
The Staff issued the following publications relating 
to NRSROs or credit ratings in general during the 
Report Period:
 ■2020 Summary Report of Commission Staff’s 
Examinations of Each Nationally Recognized 
Statistical Rating Organization, dated December 
2020 (December 2020 Exam Report), as 
required under Section 15E(p)(3)(C).
117
 The 
December 2020 Exam Report summarizes  
the essential findings of the examinations 
conducted by the Staff under Section 15E(p)
(3)(C) for the period January 1, 2019 through 
December 31, 2019.
 ■Annual Report on Nationally Recognized 
Statistical Rating Organizations, dated 
December 2020 (December 2020 Annual 
Report), as required by Section 6 of the Rating 
Agency Act.
118
 The December 2020 Annual 
Report addresses the matters described in the 
second paragraph under Section II of this Report 
for the period June 26, 2019 to June 25, 2020. 
C. ADVISORY COMMITTEES
The SEC’s Investor Advisory Committee (IAC)
119
 
has considered the SEC’s approach to regulation of 
the credit rating agency industry. The IAC met five 
times during the Report Period. At the IAC meeting 
on March 11, 2021,
120
 the IAC approved, for the 
Commission’s consideration, the Market Structure 
Subcommittee’s recommendation for increasing 
transparency in OCR Staff’s annual examination 
reports of NRSROs.
121
117 Available at https://www.sec.gov/files/nrsro-summary-report-2020.pdf. 
118
 Available at https://www.sec.gov/files/2020-annual-report-on-nrsros.pdf. 
119
 Section 911 of the Dodd-Frank Act established the IAC to advise the Commission on regulatory priorities, the regulation 
of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect 
investor interests and to promote investor confidence and the integrity of the securities marketplace. The Dodd-Frank 
Act authorizes the IAC to submit findings and recommendations for review and consideration by the Commission. 
See https://www.sec.gov/spotlight/investor-advisory-committee.shtml; https://www.sec.gov/spotlight/investor-advisory-
committee-2012/iac-charter.pdf.
120
 See Webcast of IAC Meeting, SEC (Mar. 11, 2021), available at https://www.sec.gov/video/webcast-archive-player.
shtml?document_id=iac031121. The IAC’s Market Structure Subcommittee circulated its draft recommendation 
ahead of this IAC meeting. See https://www.sec.gov/spotlight/investor-advisory-committee-2012/credit-rating-agencies-
recommendation-03112021.pdf. 
121
 See Recommendation of the Market Structure Subcommittee of the SEC Investor Advisory Committee Regarding Credit 
Rating Agencies (Mar. 11, 2021), available at https://www.sec.gov/spotlight/investor-advisory-committee-2012/20210311-
credit-rating-agencies-recommendation.pdf.

 STAFF REPORT    |  51
VI. APPENDIX:  
SUMMARY OF STATUTORY 
FRAMEWORK AND RULES
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 Act
122
 and amended by the 
Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act).
123
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.
124
 
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,
125
 promptly 
update its filing in certain circumstances,
126
 and 
make its current Form NRSRO filing and most 
of its current Form NRSRO Exhibits available 
on its public website.
127
 
 ■Disclose certain information, including 
information concerning the NRSRO’s 
performance measurement statistics and  
its procedures and methodologies to  
determine ratings.
128
 ■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,
129
 and retain records of its internal 
control structure.
130
 ■Consider certain factors with respect to its 
establishment, maintenance, enforcement,  
and documentation of an effective internal 
control structure.
131
122 Pub. L. No. 109-291, 120 Stat. 1327 (2006).
123 Pub. L. No. 111-203, § 932, 124 Stat. 1376, 1872-83 (2010).
124
 See Section 15E(p)(2) for a description of OCR staffing requirements.
125
 Section 15E(b)(2) and Rule 17g-1(f).
126 Section 15E(b)(1) and Rule 17g-1(e).
127 Section 15E(a)(3) and Rule 17g-1(i).
128 Section 15E(a)(1)(B)(i) and Section 15E(a)(1)(B)(ii).
129 Section 15E(c)(3)(A). 
130 Rule 17g-2(b)(12).
131 See, e.g., Rule 17g-8(d)(1)–(4). 

52    |  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.
132
 
 ■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.
133
 
The report must be accompanied by a signed 
statement by the NRSRO’s chief executive officer 
or an individual performing similar functions.
134
 ■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,
135
 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.
136
 
 ■Publish an information disclosure form when 
taking a rating action with respect to a rating 
assigned to an obligor, security, or money-market 
instrument in a class for which it is registered 
as an NRSRO.
137
 The information form must 
disclose certain information with respect to 
the particular rating action.
138
 In addition, 
the NRSRO must attach to the information 
disclosure form a signed statement by a person 
within the NRSRO with responsibility for the 
rating action.
139
132 See, e.g., Rule 17g-8(a)(2)–(5). 
133
 Rule 17g-3(a)(7)(i).
134 Rule 17g-3(b)(2).
135 Rule 17g-8(b)(1).
136 Rule 17g-8(b)(3).
137 Rule 17g-7(a). Rule 17g-7(a) defines rating action to include an expected or preliminary rating, an initial rating, an 
upgrade or downgrade of an existing rating (including a downgrade to, or assignment of, default), and an affirmation 
or withdrawal of an existing rating if the affirmation or withdrawal is the result of the NRSRO’s review of the rating 
using applicable procedures and methodologies for determining credit ratings. Pursuant to Rule 17g-7(a)(3), an NRSRO 
is exempt from publishing an information disclosure form for a particular rating if: (i) the rated obligor or issuer of the 
rated security or money market instrument is not a U.S. person; and (ii) the NRSRO has a reasonable basis to conclude 
that: (A) with respect to any security or money market instrument issued by a rated obligor, all offers and sales by any 
issuer, sponsor, or underwriter linked to the security or money market instrument will occur outside the United States; or 
(B) with respect to a rated security or money market instrument, all offers and sales by any issuer, sponsor, or underwriter 
linked to a security or money market instrument will occur outside the United States.
138
 Rule 17g-7(a)(1)(ii)(A)-(N) specifies the information that must be disclosed in the information disclosure form. These 
required disclosures include: the version of the procedure or methodology used to determine the credit rating; disclosures 
concerning the uncertainty of the rating, including regarding the reliability, accuracy, quality, and accessibility of data 
related to the rating; a statement containing an overall assessment of the quality of information available and considered 
in determining the credit rating for the obligor, security, or money market instrument; and information on the sensitivity of 
the rating to assumptions made by the NRSRO. In addition, an NRSRO must attach to the information disclosure form 
any executed Form ABS Due Diligence-15E containing information about the security or money market instrument subject 
to the rating action that is received by the NRSRO or obtained by the NRSRO through a Rule 17g-5(a)(3) website. 
139
 Rule 17g-7(a)(1)(iii).

 STAFF REPORT    |  53
 ■Make and retain, or retain, certain records, 
including a record documenting its established 
procedures and methodologies used to 
determine credit ratings
140
 and records related 
to its ratings.
141
 An NRSRO must promptly 
furnish to the Commission or its representatives 
copies of required records, including English 
translations of those records, upon request.
142
 ■Establish, maintain, and enforce written policies 
and procedures reasonably designed to prevent 
the misuse of material non-public information 
(MNPI), including the inappropriate dissemi-
nation 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.
143
 ■Establish, maintain, and enforce written  
policies and procedures reasonably designed 
to address and manage conflicts of interest.
144
 
Certain conflicts of interest are expressly 
prohibited,
145
 and for other types of conflicts of 
interest, the NRSRO must disclose the conflicts 
and have policies and procedures in place to 
manage them.
146
 ■Refrain from engaging in specified unfair, 
coercive, or abusive practices.
147
 ■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.
148
 
 ■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.
149
 
140 Rule 17g-2(a)(6).
141 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).
142
 Section 15E(a) and (b) and Rule 17g-2(f).
143 Section 15E(g) and Rule 17g-4.
144 Section 15E(h) and Rule 17g-5. See also Section IV.C of this Report.
145
 Rule 17g-5(c). See also Section IV.C of this Report.
146
 Rule 17g-5(a)(1) and (a)(2); Rule 17g-5(b). Moreover, Rule 17g-5(a)(3) prohibits an NRSRO from having a conflict 
of interest related to a rating for a security or money market instrument issued by an asset pool or as part of any ABS 
transaction unless the NRSRO, among other things, maintains and provides access to a password-protected Internet 
Web site containing a list of each such security or money market instrument for which it is currently in the process of 
determining an initial credit rating, and obtains certain written representations from the issuer, sponsor, or underwriter  
of each such security or money market instrument. 
147
 Rule 17g-6.
148 Section 15E(a)(1)(B)(v).
149 Section 15E(j)(3).

54    |  OFFICE OF CREDIT RATINGS 
 ■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.
150
 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.
151
 ■Have a board of directors or similar governing 
body (collectively, the Board), certain of 
whose members must be independent from 
the NRSRO.
152
 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.
153
 ■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.
154
 
 ■Establish policies and procedures regarding 
post-employment activities of certain  
former personnel.
155
 
150 Section 15E(j)(1) and (3).
151 Section 15E(j)(5).
152 Section 15E(t)(2).
153 Section 15E(t)(3) and Rule 17g-8(a)(1).
154 Rule 17g-9.
155 Section 15E(h)(4) and (5); Rule 17g-8(c).

 STAFF REPORT    |  55

Washington, DC

O F F I C E  O F  C R E D I T  R A T I N G S

Staff
Report
ON 

NATIONALLY RECOGNIZED  

STATISTICAL RATING  

ORGANIZATIONS

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

January 2022

U . S .  S E C U R I T I E S  A N D  E X C H A N G E  C O M M I S S I O N



ii  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

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 TA F F  R E P O R T   |   i

Contents

CHARTS .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                     ii

I. MESSAGE FROM THE DIRECTOR.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                      1

II. INTRODUCTION.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                3

A. Status of Registrants and Applicants.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                 4

III. EXAMINATIONS AND MONITORING.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                    7

A. �Overview .  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 7

B. �Risk Assessment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                             7

C. �Monitoring.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                 9

D. 2021 Section 15E(p)(3) Examinations.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                10

1. 2021 Section 15E Examinations .  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   10

2. Terms Used in This Report.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                     11

3. Summary of Essential Findings and Responses to Material Regulatory Deficiencies.  .   12

4. Responses to Recommendations from the 2020 Section 15E Examinations .  .   .   .   .   .   18

5. Essential Findings Trends .  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   19

IV. STATE OF COMPETITION, TRANSPARENCY, AND CONFLICTS OF INTEREST .  .   .   .   .   .   .   .   .   21

A. �Competition.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                21

1. Select NRSRO Statistics.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                       21

2. Developments in the State of Competition Among NRSROs .  .   .   .   .   .   .   .   .   .   .   .   .   .   .  32

3. Barriers to Entry.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                          41

B. Transparency .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                             43

C. Conflicts of Interest.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  45

V. ACTIVITIES RELATING TO NRSROS .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                  49

A. Commission Orders and Releases.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                 49

B. Staff Publications.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                           50

C. Advisory Committees.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                        50

VI. APPENDIX: SUMMARY OF STATUTORY FRAMEWORK AND RULES.  .  .  .  .  .  .  .  .  .  .  .  .  .  .                51



ii  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Charts
Chart 1.	� Table of NRSROs.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 5

Chart 2.	� Essential Findings by Section 15E Review Area: 2016 to 2021 .  .  .  .  .  .  .  .  .  .  .  .  .             19

Chart 3.	� Number of Essential Findings by Section 15E Review Area: 2016 to 2021 .  .  .  .  .      20

Chart 4.	� Average Number of Essential Findings by Large, Medium, and  
Small NRSROs: 2016 to 2021.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 20

Chart 5.	� Number of Outstanding Credit Ratings as of December 31, 2020  
by Rating Category.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                     23

Chart 6.	� Year-Over-Year Changes in Percentage Share of Total Number of  
Ratings Outstanding from 2019 – 2020.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                         23

Chart 7.	 �Percentage by Rating Category of Each NRSRO’s Outstanding  
Credit Ratings of the Total Outstanding Credit Ratings of all NRSROs  
as of December 31, 2020.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                  24

Chart 8.	� Percentage Change of Total Ratings Outstanding Per Asset Class  
2019 to 2020 – Large NRSROs Compared to Small/Medium NRSROs.  .  .  .  .  .  .  .       25

Chart 9.	� Breakdown of Ratings Reported Outstanding by Rating Category  
as of December 31, 2020.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                  26

Chart 10.	� Breakdown of Ratings Reported Outstanding by NRSRO as of  
December 31, 2020.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                     26

Chart 11.	� Breakdown of Non-Government Securities Ratings Reported Outstanding  
by NRSRO as of December 31, 2020.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                           27

Chart 12.	� Breakdown of Government Securities Ratings Reported Outstanding  
on December 31, 2020.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                   27

Chart 13.	� NRSRO Credit Analysts and Credit Analyst Supervisors .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .               28

Chart 14.	� NRSRO Fiscal Year Revenue as a Percentage of Aggregate  
Reported Revenue.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  29

Chart 15.	� Rating Agency Market Share for Total Non-Agency U.S. CMBS Issued in  
2019, 2020, and First Half of 2021.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 34

Chart 16.	� Rating Agency Market Share for U.S. Conduit CMBS Issued in 2019, 2020,  
and First Half of 2021.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                     34

Chart 17.	� Rating Agency Market Share for U.S. Single-Borrower CMBS Issued in  
2019, 2020, and First Half of 2021.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  35

Chart 18.	� Rating Agency Market Share for Agency CMBS Issued in 2019, 2020,  
and First Half of 2021.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                    35

Chart 19.	� Rating Agency Market Shares for U.S. ABS Issued in 2019, 2020,  
and First Half of 2021.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                    37

Chart 20.	� Rating Agency Market Shares for U.S. MBS Issued in 2019, 2020,  
and First Half of 2021.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                    38

Chart 21.	� Rating Agency Market Shares for U.S. CLO Issued in First Half of  
2019, 2020, and First Half of 2021.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  38



S TA F F  R E P O R T   |   1

I. MESSAGE FROM
THE DIRECTOR

I
am pleased to share the Office of Credit Ratings’ 
(OCR) Staff Report (Report) on nationally recog-
nized statistical rating organizations (NRSROs) 
for calendar year 2021. During 2021, OCR, the 

U.S. Securities and Exchange Commission (the 
Commission or SEC), and the market continued to 
navigate the extraordinary circumstances caused 
by COVID-19. Through it all, OCR continued, 
without interruption, to excel at its mission of 
assisting the Commission in protecting investors, 
promoting capital formation, and maintaining fair, 
orderly, and efficient markets through the oversight 
of NRSROs.

In past years, OCR published two separate annual 
reports: The Annual Report to Congress and the 
Summary Examination Report. For the first time, 
OCR has prepared one report that combines 
the information from the two reports to present 
OCR’s annual activity in a more integrated way. 
In addition to combining the reports, we have 
also made a variety of substantive and organiza-
tional changes to the Report to provide greater 
transparency about the NRSROs and their credit 
ratings businesses, and the market more broadly. 
For example, to increase transparency about 
OCR’s exam findings, the Report organizes the 

NRSROs into three groups—“large,” “medium,” 
and “small”—instead of two groups (“larger” and 
“smaller”) as in past years.

The Report includes a summary of the Commission 
staff’s (the Staff) essential findings from the most 
recently completed examination of each NRSRO. 
These examinations covered the eight statutorily 
mandated review areas and focused on certain 
subjects and activities that the Staff, through its 
risk assessment process, identified as relevant to 
certain NRSROs, including Environmental, Social, 
and Governance (ESG) issues, COVID-19, and 
collateralized loan obligations (CLOs). In addition, 
the Report also includes, for the first time, the 
Staff’s definitions of the terms “essential finding” 
and “material regulatory deficiencies” to provide 
greater transparency regarding OCR’s work.

OCR’s examinations have been successful in 
promoting greater compliance by NRSROs with 
applicable laws and rules as the NRSROs advance 
initiatives to address the Staff’s recommendations. 
The Report includes a new section on essential 
findings trends from examinations conducted 
between 2016 and 2021.



2  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

The Report also discusses the state of competition, 
transparency, and conflicts of interest at NRSROs. 
Importantly, the Report illustrates that the small 
and medium NRSROs (as defined below) continue 
to compete with the largest three NRSROs, with 
each of the small and medium firms increasing its 
total number of ratings outstanding as compared 
to declines among two of the largest three firms. 
The data show these increases occurring across 
all rating categories and, though modest in total 
number, illustrate, in some cases, significant year-
over-year increases in rating activity for some firms. 

To help inform its risk assessment process, exam 
program, and policy initiatives, OCR monitors 
credit rating activity and industry developments, 
especially in connection with capital market and 
economic events and trends, such as ESG and 
COVID-19. Staff communicates with NRSROs  
and a variety of market participants, and reviews

NRSRO publications, news reports, trade publica-
tions, academic papers, and government reports, 
among other information sources.

The year continued to see OCR leadership and 
Staff engaged in discussions about the issues and 
challenges of diversity, equity, and inclusion. Along 
with our partners in the Office of Minority and 
Women Inclusion, the Office of Equal Employment 
Opportunity, and the Office of the Chair we will 
continue to embrace these topics as we continu-
ously work to fulfill our mission.
 
As proud as I am of everything OCR accomplished 
throughout 2021, I truly believe that the best is 
yet to come as OCR advances the SEC’s mission 
through the dedicated oversight of NRSROs in the 
coming years. I hope you find the Report inter-
esting and informative.

Ahmed Abonamah



	 S TA F F  R E P O R T   |   3

II. INTRODUCTION

T
he Staff of the Commission provides this 
Report regarding 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 This Report generally 
focuses on the period from January 1, 2021 to 
December 31, 2021 (the Report Period).3

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 Representa-
tives 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 on examinations.

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.

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	 The Annual Report and the Summary Examination Report covered different time periods. In order to align the time 

periods, Sections II.A and IV. of this Report include information about applications for registration as NRSROs and views 
of the Commission on the state of competition, transparency, and conflicts of interest among NRSROs from June 26, 
2020 through December 31, 2021 (the December 2020 Annual Report reported this information through June 25, 2020). 
Section V of this Report includes information about activities relating to NRSROs from December 1, 2020 through 
December 31, 2021 (the December 2020 Annual Report included this information through November 30, 2020).



4  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Information regarding the topics covered in this 
Report with respect to prior periods can be found 
on the OCR page of the Commission’s website.4

Information regarding the registration and 
oversight program for credit rating agencies that 
are registered with the Commission as NRSROs 
can be found in Section VI. of this Report.

A. STATUS OF REGISTRANTS 
AND APPLICANTS
In 2007, the Commission began granting registra-
tions to credit rating agencies that applied to be 
registered as an NRSRO. Section 3(a)(62) defines 
a “nationally recognized statistical rating organi-
zation” 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 (as that term 

is defined in 17 CFR 229.1101(c)); 
(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, 2021, there were nine credit 
rating agencies registered as NRSROs.6 Chart 
1 below lists each NRSRO registered with the 
Commission, 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	 The prior annual reports pursuant to Section 6 of the Rating Agency Act, through December 2020, 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. Separately, the prior summary reports of the Staff’s examinations of NRSROs 
pursuant to Section 15E(p)(3), through December 2020, can be found under “Summary Examination Reports” in the 
“Reports and Studies” section of the OCR webpage, available at https://www.sec.gov/ocr/ocr-reports-and-studies.html.

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 Rule 17g-1(e) 
and (1)(f), and each NRSRO must make its current Form NRSRO publicly and freely available on its website pursuant 
to Rule 17g-1(i). 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. 

https://www.sec.gov/ocr/ocr-reports-and-studies.html
https://www.sec.gov/ocr/ocr-reports-and-studies.html
https://www.sec.gov/ocr/ocr-reports-and-studies.html
https://www.sec.gov/edgar/searchedgar/companysearch.html
https://www.sec.gov/edgar/searchedgar/companysearch.html
https://www.sec.gov/ocr/ocr-current-nrsros.html


	 S TA F F  R E P O R T   |   5

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.

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, Inc. (KBRA) (i) through (v) U.S.

Moody’s Investors Service, Inc. (MIS) (i) through (v) U.S.

S&P Global Ratings (S&P) (i) through (v) U.S.

For purposes of this Report only, we refer to Fitch, 
MIS, and S&P as “large NRSROs”; AMB, DBRS, 
and KBRA as “medium NRSROs”; and EJR, HR, 
and JCR as “small NRSROs” based on revenue.8

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.9 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 
rating agency but it may not issue credit ratings as

an NRSRO.10 In addition, a credit rating agency 
may choose to apply for registration as an NRSRO 
in one or more rating categories.11 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.

No applications for initial registration as an 
NRSRO or for registration by a current NRSRO 
in additional rating categories were filed with the 
Commission in the Report Period. 

8	 OCR’s prior reports categorized the NRSROs in two groups: the “larger NRSROs” (Fitch, MIS, and S&P) and the 
“smaller NRSROs” (AMB, DBRS, EJR, HR, JCR, and KBRA). Beginning with this Report, we have re-categorized  
the NRSROs into three groups based on revenue as reported on each NRSRO’s most recently filed Rule 17g-3(a)(3) 
financial report.

9	 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.

10	 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.

11	 See Section 3(a)(62)(A)(i) – (vi).

https://www.sec.gov/about/forms/formnrsro.pdf
https://www.sec.gov/about/forms/formnrsro.pdf
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_creditratings
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_creditratings
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_creditratings




	 S TA F F  R E P O R T   |   7

III. EXAMINATIONS  
AND MONITORING

A. �OVERVIEW

G
enerally, the purpose of NRSRO exami-
nations is to promote compliance with 
applicable federal securities laws and 
rules by identifying potential instances of 

non-compliance of NRSROs with their statutory 
and regulatory obligations and encouraging 
remedial action. Examinations also inform the 
Commission and the NRSROs’ compliance 
personnel of regulatory obligations and 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, the Staff may refer findings to the 
Commission’s Division of Enforcement for investi-
gation.

Section 15E(p)(3)(B) provides that each NRSRO 
examination shall include a review 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.

B. �RISK ASSESSMENT
The 2021 Section 15E examinations encompassed 
all of the statutorily required Section 15E Review 
Areas. Within each of the Section 15E Review 
Areas, the Staff determined areas of emphasis 
and issues of focus for each NRSRO 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; 
	■ 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; 



8  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

	■ NRSROs’ self-identified weaknesses; and
	■ Relevant Tips, Complaints, and Referrals 

(TCRs) received by the Commission. 

The 2021 Section 15E examinations also focused 
on certain subjects and activities that the Staff, 
through its risk assessment process, identified as 
relevant to certain NRSROs, as summarized below. 

	■ ESG Factors and Products: NRSROs and their 
affiliates have developed and are offering an 
increasing number of ESG-related products and 
services.12 Development in the area has grown 
rapidly, and competition has increased among 
NRSRO and non-NRSRO providers, leading 
the Staff to identify several areas of potential 
risk to NRSROs. These include the risks that, 
in incorporating ESG factors into ratings 
determinations, NRSROs may not adhere to 
their methodologies or policies and procedures, 
consistently apply ESG factors, make adequate 
disclosure regarding the use of ESG factors 
applied in rating actions, or maintain effective 
internal controls involving the use in ratings of 
ESG-related data from affiliates or unaffiliated 
third parties. The Staff also identified the 
potential risk for conflicts of interest if an 
NRSRO offers ratings and non-ratings ESG 
products and services.

	■ COVID-19 Related Risk Areas: COVID-19 
caused a sudden economic shock that led 
to NRSROs downgrading certain ratings, 
changing their macroeconomic forecasts and 
assumptions, and revising some methodologies. 
The Staff identified as potential risks whether 
the NRSROs have sufficient controls in place 
to ensure that changes to assumptions and 
inputs are applied and disclosed in ratings 
determinations, and whether data collected by 
NRSROs during the pre-COVID period and 
used in ratings determinations was adjusted to 
reflect how assets will perform in a COVID-
affected economy. The Staff noted that such 
risks could have a heightened effect on the 
assignment and surveillance of ratings in 
particular sectors. 

	■ CLOs: Qualitative adjustments may be made 
during the rating process for certain CLOs. The 
Staff identified a potential risk that NRSROs 
may not adhere to their policies, procedures, 
and methodologies in making such adjustments, 
as well as the risk that the practice could lead to 
inconsistent use of ratings symbols. 

	■ Commercial Real Estate: Commercial real 
estate assets experienced a period of economic 
distress that could have an effect on credit 
ratings associated with such properties. The 
Staff identified a potential risk that NRSROs 
may not adhere to their policies and procedures 
regarding surveillance of such ratings, or to their 
methodologies with respect to the use of data 
associated with determining cash flows from the 
underlying properties and property valuations.

12	 Some NRSROs offer ESG products and services separate from their credit ratings, and corporate affiliates of NRSROs, 
which are entirely separate from the NRSROs, may also offer ESG products and services. 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. These products and services are 
not credit ratings and are therefore not directly regulated by OCR.



	 S TA F F  R E P O R T   |   9

	■ Consumer Asset-Backed Securities: The 
COVID-19 economic shock reduced consumer 
incomes resulting in potential impact to 
ratings on consumer asset-backed securities.  
The Staff identified potential risks to credit 
ratings with regard to repayment challenges,  
a lack of standardization with regard to 
servicers, reporting standards and treatment  
of forbearances, deferrals, and extensions, 
and the absence of standardized definitions  
of default in the sector, if NRSROs did not 
adhere to their relevant policies, procedures,  
and methodologies.

	■ Low-Investment Grade-Rated Corporates: 
The proportion of U.S. corporate debt rated in 
the BBB category increased over several years, 
reaching a historically high level in 2020. The 
Staff identified a risk posed to credit ratings 
if NRSROs did not adhere to their relevant 
surveillance practices, policies, procedures,  
and methodologies regarding such debt. 

	■ Municipal Securities: An NRSRO did not make 
a timely discovery of incorrect information it 
received regarding when securities had been 
paid off and also failed to identify existing 
rating errors where a rating had gone through 
the surveillance process. The Staff identified 
as a potential risk, particularly for NRSROs 
with a large volume of municipal ratings, that 
such NRSROs may lack adequate controls for 
detecting rating errors or may not adhere to 
policies and procedures used to determine when 
municipal ratings should be withdrawn. 

The foregoing were incorporated into the Section 
15E examinations as appropriate for each NRSRO.

C. �MONITORING
To help inform its risk assessment process and 
exam program, the Staff also actively monitored 
credit rating activity and industry developments 
during the Report Period, especially in connection 
with capital market and economic events and 
trends, such as ESG, COVID-19, cybersecurity,  
and digital assets. The Staff communicated with 
NRSROs and market participants, and reviewed 
NRSRO publications, news reports, trade publica-
tions, academic papers, and government reports, 
among other information sources.

The Staff’s monitoring efforts included, for 
example, discussions that covered the scope and 
nature of rating actions for which NRSROs cited 
the impact of COVID-19 and resulting business 
shutdowns as material credit considerations and 
how NRSROs incorporated ESG considerations 
into credit ratings and communicated such consid-
erations to the market. Monitoring also covered 
NRSRO considerations of distributed ledger 
technologies, digital assets, and smart contracts in 
credit ratings13 and NRSRO perspectives on cyber 
risk management and the vulnerability to and 
financial impact of cyber attacks.

13	 OCR continues to monitor these developing areas and has observed limited NRSRO ratings activity. For example, 
in early 2020, DBRS rated debt securities issued on a blockchain, noting that the structuring consultant intends to 
issue security tokens to all investors and record the transaction on the Ethereum blockchain. See Press Release: DBRS 
Morningstar Finalizes Provisional Ratings on FAT Brands Royalty I, LLC (Mar. 9, 2020), available at https://www.
dbrsmorningstar.com/research/357772/dbrs-morningstar-finalizes-provisional-ratings-on-fat-brands-royalty-i-llc.

https://www.dbrsmorningstar.com/research/357772/dbrs-morningstar-finalizes-provisional-ratings-on-fat-brands-royalty-i-llc
https://www.dbrsmorningstar.com/research/357772/dbrs-morningstar-finalizes-provisional-ratings-on-fat-brands-royalty-i-llc
https://www.dbrsmorningstar.com/research/357772/dbrs-morningstar-finalizes-provisional-ratings-on-fa
https://www.dbrsmorningstar.com/research/357772/dbrs-morningstar-finalizes-provisional-ratings-on-fa


10  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

The Staff also monitored other industry events 
during the Report Period, including, for example, 
the NRSRO response to Archegos Capital 
Management,14 the NRSRO approach to rating 
companies emerging from special purpose acqui-
sition company (SPAC) transactions,15 and the 
NRSRO response to financial stress experienced by 
Chinese property and development companies.16 
Monitoring also covered NRSRO projections for 
inflation, perceptions of its causes, and views as to 
the potential credit impacts on entities and transac-
tions across different market sectors. 

D. 2021 SECTION 15E(p)(3) 
EXAMINATIONS

1. 2021 Section 15E Examinations

The 2021 Section 15E examinations generally 
focused on the NRSROs’ activities for the period 
covering January 1, 2020 through December 31, 
2020 (the Review Period). Examinations also 
reviewed certain activities or credit rating actions 
from outside the Review Period.17 

The 2021 Section 15E examinations reviewed  
the Section 15E Review Areas and examined  
each NRSRO’s adherence to 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.18

During the Review Period, 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 agencies.19 During the 
Review Period, each college conducted periodic

14	 See e.g., Fitch, Archegos Fallout Signals Heightened Counterparty, Regulatory Risk, available at https://www.fitchratings.
com/research/banks/archegos-fallout-signals-heightened-counterparty-regulatory-risk-01-04-2021.

15	 See e.g., S&P, Credit FAQ: SPACs and Credit Quality: S&P Global Ratings’ Recent Ratings Experience, available at 
https://www.spglobal.com/ratings/en/research/articles/210312-credit-faq-spacs-and-credit-quality-s-p-global-ratings-
recent-ratings-experience-11868991.

16	 See e.g., Moody’s, Research Announcement: Chinese Property Developers’ Liquidity Stress Will Continue Amid Tight 
Credit Conditions and Lowered Sales, available at https://www.moodys.com/research/Moodys-Chinese-property-
developers-liquidity-stress-will-continue-amid-tight--PBC_1311317.

17	 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.

18	 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.

19	 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 colleges for S&P and MIS, and OCR Staff 
represents the SEC in this regard. The European Securities and Markets Authority serves as chair of the college for Fitch.

https://www.fitchratings.com/research/banks/archegos-fallout-signals-heightened-counterparty-regulatory-risk-01-04-2021
https://www.fitchratings.com/research/banks/archegos-fallout-signals-heightened-counterparty-regulatory-risk-01-04-2021
https://www.spglobal.com/ratings/en/research/articles/210312-credit-faq-spacs-and-credit-quality-s-p-global-ratings-recent-ratings-experience-11868991
https://www.spglobal.com/ratings/en/research/articles/210312-credit-faq-spacs-and-credit-quality-s-p-global-ratings-recent-ratings-experience-11868991
https://www.iosco.org/library/pubdocs/pdf/IOSCOPD416.pdf
https://www.iosco.org/library/pubdocs/pdf/IOSCOPD416.pdf


	 S TA F F  R E P O R T   |   11

calls to discuss supervisory activities related to the 
credit rating agencies. The Staff also conducted 
additional discussions with international regulators, 
as appropriate.

2. Terms Used in This Report

Section 15E(p)(3)(C)(i)-(iii) requires this Report to  
contain a summary of, respectively, the essential  
findings of the annual examinations, as deemed  
appropriate by the Commission; the NRSROs’ 
responses to any material regulatory deficiencies 
identified by the Commission; and whether the 
NRSROs have appropriately addressed the recom-
mendations of the Commission contained in 
previous reports.20

For purposes of this Report, the Staff considers an 
“essential finding” to be any instance 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.

The Staff’s determination that an NRSRO appro-
priately addressed a recommendation does not 
constitute its endorsement of that NRSRO or its  
policies, procedures, internal controls, or opera-
tions. In a future examination, the Staff may 
reevaluate the NRSRO’s response to recommenda-
tions 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 determination of whether an 
NRSRO appropriately addressed a recommen-
dation reflects solely the Staff’s view and does not 
necessarily reflect the views of the Commission. 

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.

20	 In this Report, essential findings are organized by NRSRO within the applicable large, medium, and small groups. This 
Report uses the phrases “significant,” “numerous,” “several,” and “some” to describe and distinguish the frequency of 
conduct or instances underlying certain essential findings. The particular phrase used generally reflects the number of 
instances during the Review Period, recognizing that the number of instances may be reflective of a test sample and not 
necessarily an NRSRO’s comprehensive activities during the Review Period.



12  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

3. Summary of Essential Findings and 

Responses to Material Regulatory 

Deficiencies

a. Large NRSRO #1

(1) The NRSRO did not report an allegation of 
fraud and therefore did not appear to comply 
with Section 15E(u) or the NRSRO’s policies 
and procedures. The NRSRO issued a credit 
rating on a bond after the underwriter for 
the bond communicated to an analyst of the 
NRSRO an allegation of potential fraud relating 
to the authenticity of a letter of credit upon 
which such credit rating was based. The Staff 
also noted that the NRSRO did not withdraw 
the credit rating for some months during which 
the NRSRO had knowledge of a potential fraud. 
The Staff recommended that the NRSRO adhere 
to its policies and procedures to ensure that it 
fulfils its obligations under Section 15E(u). 
 
The Staff identified such essential finding as a 
material regulatory deficiency.  
 
The NRSRO stated in its response that, while 
the analyst inquired of the underwriter and its 
counsel, the analyst did not report the matter 
because communication with the underwriter 
led him to believe that the matter was under 
review by the bank that provided the letter 
of credit. The NRSRO also stated that the 
failure of the transaction to close was not itself 
indicative of fraud because transactions can fail 
to close for other reasons. The NRSRO agreed 
that the allegation should have been reported 
to the compliance department, and the NRSRO 
conducted an internal investigation, resulting 
in discipline of the analyst. Furthermore, 
the NRSRO issued a communication to all 

employees regarding their obligations to 
internally report allegations that may implicate 
the NRSRO’s obligations under Section 15E(u), 
encouraging them to consult with a compliance 
officer if they have any doubt as to whether a 
particular matter should be reported.  

(2) The NRSRO did not appear to preserve certain 
documents in the manner that the NRSRO’s 
policies and procedures require, and the 
NRSRO did not promptly produce complete 
copies of records required to be retained in 
accordance with Rule 17g-2(b)(2). The NRSRO 
also did not timely provide to the Staff other 
documents in accordance with Rule 17g-2(f). 
The Staff recommended that the NRSRO 
ensure that it includes all relevant documents 
in its productions and retains required records 
in a way that enables it to promptly furnish 
complete copies of such records in response to 
requests from the Staff. 

(3) The NRSRO did not appear to evaluate and 
record all potential complaints in the manner 
that its policies and procedures required. The 
NRSRO also did not document its conclusion 
with respect to handling a complaint, contrary 
to the NRSRO’s policies and procedures. The 
Staff recommended that the NRSRO ensure 
that all complaints are subject to its policies 
and procedures for the receipt, retention, and 
treatment of complaints.

b. Large NRSRO #2

(1) The NRSRO did not appear to comply with 
Rule 17g-7(a) disclosure requirements when 
taking a significant number of rating actions. 
As a result of a coding error that the NRSRO 
identified in its systems, the NRSRO did not 



	 S TA F F  R E P O R T   |   13

timely publish information disclosure forms 
for a significant number of surveillance rating 
actions during some years. The Staff recom-
mended that the NRSRO ensure compliance 
with Rule 17g-7(a) disclosure requirements. 

(2) The NRSRO did not appear to enforce its 
policies and procedures as required by Section 
15E(h)(4)(A) and (5)(A). The NRSRO produced 
to the Staff a report that identified a number of 
instances where the NRSRO did not appear to 
comply with its policies and procedures related 
to statutorily-mandated post-employment 
requirements. Among other things, such report 
indicated that the NRSRO did not submit 
certain Employment Transition Reports to the 
Commission. The Staff recommended that the 
NRSRO enforce its policies and procedures 
related to post-employment requirements.

c. Large NRSRO #3

(1) The NRSRO made clarifying changes to a draft 
rating report for an issuer’s credit rating after 
receiving comments from the issuer, and such 
changes did not appear to be approved in the 
manner required by the NRSRO’s policies and 
procedures. The Staff recommended that the 
NRSRO ensure that it adheres to its policies 
and procedures for documentation evidencing 
approval of changes to a rating report requested 
by an issuer. 

(2) The NRSRO did not appear to have effective 
internal controls pursuant to Section 15E(c)
(3)(A) to ensure that it does not inadvertently 
withdraw certain active credit ratings. Specifi-
cally, the NRSRO reported two instances in 
which it inadvertently withdrew from its 
website a significant number of credit ratings  

for active securities. Such instances were based 
on the NRSRO incorrectly processing third 
party data. The Staff recommended that the 
NRSRO establish effective internal controls to 
ensure that it does not inadvertently withdraw 
certain active credit ratings.

d. Medium NRSRO #1

(1) The NRSRO issued and maintained some credit 
ratings that appeared to be prohibited by Rule 
17g-5(c)(2). Contrary to the NRSRO’s policies 
and procedures, certain NRSRO employees 
held restricted securities in a managed account 
and the NRSRO’s compliance department did 
not routinely perform post-trade reviews of 
brokerage statements for managed accounts. 
On some occasions, an analyst participated 
in a rating committee while holding securities 
of the rated entity in a managed account. 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 held in employees’ managed accounts. 
 
The Staff identified such essential finding as a 
material regulatory deficiency.  
 
In its response, the NRSRO stated that it 
has commenced an action plan designed to 
strengthen relevant systems, practices, policies, 
resources, and personnel. The action plan 
includes, among other things: (i) changes to the 
organizational design and staffing of a relevant 
team; (ii) selection and deployment of a new 
system used to monitor and enforce compliance 
with applicable procedures; (iii) an organiza-
tional initiative led by senior management to 
foster adherence to policies and procedures;  



14  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

(iv) a review, led by counsel, of (and appropriate 
enhancements to) policies, procedures and 
practices focused on avoidance or management 
of actual, potential or perceived conflicts 
of interest relating to the issuance of credit 
ratings; (v) improvements to certain compliance 
reporting to senior management; and  
(vi) outreach by compliance to analytical 
personnel regarding their responsibilities and 
obligations under applicable policies and 
procedures, with a particular focus on securities 
held in managed accounts. The NRSRO has 
completed some measures of such action plan, 
and others are still on-going. The NRSRO will 
continue assessing the robustness of its action 
plan and may implement additional measures. 

(2) The NRSRO did not appear to enforce its 
policies and procedures in some instances as 
Section 15E(g)(1) requires, by granting access to 
certain information without required approval, 
mistakenly sending certain information intended 
for one recipient to numerous recipients, and not 
taking reasonable steps to protect confidential 
information from inadvertent disclosure. The 
Staff recommended that the NRSRO enforce 
its policies and procedures with respect to the 
protection of material non-public information. 

(3) The NRSRO did not appear to follow Section 
15E(b)(2), Rule 17g-1(f), and the Form NRSRO 
Instructions when filing certain information 
with the Commission. The NRSRO filed with 
the Commission some Form NRSRO Exhibits 
that included incomplete transition/default 
matrices, incomplete and potentially inaccurate 
identifications of conflicts of interest relating to 

the issuance of credit ratings, and incomplete 
information about the NRSRO’s DCO. The 
Staff recommended that the NRSRO ensure that 
all Form NRSRO filings adhere to the Form 
NRSRO Instructions and the required infor-
mation is accurate and complete.

e. Medium NRSRO #2

(1) The NRSRO did not appear to adhere to Rule 
17g-7(a)(1)(iii) when publishing Rule 17g-7(a) 
information disclosure forms. Such forms did 
not contain an attestation that was signed as 
the rule requires. In addition, the attestation 
provided was inconsistent with the requirements 
of the rule. The Staff recommended that the 
NRSRO ensure that a person with responsi-
bility for the rating action signs the information 
disclosure forms and attests to the statements 
contained therein and that all such statements 
are consistent with the requirements of Rule 
17g-7(a)(1)(iii). 

(2) The NRSRO did not appear to make certain 
disclosures that Rule 17g-7(a)(1)(ii)(B) requires 
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 information disclosure 
forms the version of the methodology used to 
determine credit ratings. 

(3) The NRSRO did not appear to comply with 
Rule 17g-7(a)(1)(ii)(L)(1) for certain credit 
ratings. Specifically, the NRSRO’s information 
disclosure form for certain rating actions did 
not include applicable information related to 
the historical performance of the relevant credit 



	 S TA F F  R E P O R T   |   15

rating. The Staff recommended that the NRSRO 
ensure that its information disclosure forms for 
all rating actions contain the information that 
Rule 17g-7(a)(1)(ii)(L)(1) requires. 

(4) The NRSRO did not appear to provide a 
required disclosure about the conflict of interest 
described in Rule 17g-5(b)(6) in Exhibit 6 of 
Form NRSRO, given that the NRSRO’s policies 
and procedures allowed employees, in certain 
circumstances, to own securities of issuers or 
obligors subject to a credit rating determined by 
the NRSRO. Also, the NRSRO recorded that 
during the Review Period, eight employees held 
or purchased restricted securities contrary to 
such policies and procedures. The Staff recom-
mended that the NRSRO disclose conflicts of 
interest related to securities ownership by its 
employees, as the Instructions to Form NRSRO 
require, and establish, maintain, and enforce 
written policies and procedures designed to 
address and manage conflicts of interest. 

(5) The NRSRO’s policies and procedures did not 
appear to be reasonably designed to ensure 
that it will promptly publish the notice of the 
existence of a significant error as Rule 17g-8(a)
(4)(ii) requires. The NRSRO’s policies and 
procedures required the NRSRO to publish 
notice of the existence of a significant error 
identified in a procedure or methodology only 
after the development and approval of a revised 
procedure or methodology. Application of 
these policies and procedures is likely to delay 
publication of such notice. The Staff recom-
mended that the NRSRO establish, maintain, 
enforce, and document policies and procedures 

reasonably designed to ensure that it promptly 
publishes notice of the existence of a significant 
error as Rule 17g-8(a)(4)(ii) requires.

f. Medium NRSRO #3

(1) The NRSRO did not appear to adhere to Rule 
17g-7(a)(1)(iii) when publishing Rule 17g-7(a) 
information disclosure forms. Such forms 
contained an attestation that was inconsistent 
with the requirements of the rule. The Staff 
recommended that the NRSRO ensure the attes-
tation statement in information disclosure forms 
is consistent with Rule 17g-7(a)(1)(iii) text. 

(2) The NRSRO did not appear to enforce 
its policies and procedures with regard to 
publishing on an easily accessible portion of 
its website information relating to material 
changes to methodologies, as Rule 17g-8(a)
(4)(i) requires. The NRSRO’s reason for 
certain material changes to methodologies 
and disclosure about the likelihood those 
changes will result in changes to any current 
credit ratings were not easily accessible on the 
NRSRO’s website, as its policies and proce-
dures require. The Staff recommended that the 
NRSRO ensure that it promptly publishes on an 
easily accessible portion of its website material 
changes to methodologies, the reason for the 
changes, and the likelihood the changes will 
result in changes to current credit ratings. 

(3) The NRSRO did not withdraw credit ratings on 
certain matured bonds that the NRSRO stated 
it should have withdrawn and, accordingly, it 
did not appear that the NRSRO maintained 
effective internal supervisory controls as 



16  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

required by Section 15E(c)(3)(A). The Staff 
recommended that the NRSRO enhance its 
internal controls to ensure that credit ratings on 
bonds that have matured are promptly detected 
and withdrawn. 

(4) The NRSRO’s policies and procedures regarding 
complaints by employees did not appear to 
adequately address all of the requirements of 
Section 15E(j)(3). Specifically, such policies and 
procedures did not address complaints from 
employees regarding credit ratings, models, and 
methodologies and did not address employee 
complaints about the NRSRO or certain other 
third parties. The Staff recommended that the 
NRSRO establish procedures for the receipt, 
retention, and treatment of complaints to 
adequately address the requirements of Section 
15E(j)(3) for complaints from employees.

g. Small NRSRO #1

(1) The NRSRO did not appear to have reasonably 
designed procedures to ensure accurate, reliable, 
and consistent revenue information to effec-
tively monitor and prevent the occurrence of the 
conflict of interest identified in Rule 17g-5(c)
(1). The Staff recommended that the NRSRO 
establish, maintain, and enforce written policies 
and procedures, including policies and proce-
dures regarding the recognition of revenue 
in accordance with applicable accounting 
standards, reasonably designed to ensure that 
the NRSRO does not issue or maintain credit 
ratings subject to the prohibited conflict of 
interest specified in Rule 17g-5(c)(1). 
 
The Staff identified such essential finding as a 
material regulatory deficiency. 
 

In its response, the NRSRO stated that it is 
drafting a new policy and procedure to address 
the finding and recommendation in accordance 
with applicable standards relating to revenue 
from customer contracts. The NRSRO further 
stated that the new policy and procedure will 
provide requirements to ensure that revenue 
is recognized according to the new policy and 
procedure and will also include provisions 
addressing treatment for Rule 17g-5(c)(1) 
purposes where a client is billed in separate 
years. The NRSRO represented that it will begin 
complying with the new policy and procedure 
by January 1, 2022.  

(2) The NRSRO published information disclosure 
forms that did not appear to comply with Rule 
17g-7(a)(1)(ii)(J)(1), (K), and (M). Specifically, 
several such forms did not include required 
disclosures regarding the source of payment for 
the credit rating, the potential volatility of the 
credit rating, and the 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 
the disclosures that Rule 17g-7(a)(1)(ii) requires. 

(3) The NRSRO’s policies and procedures did not 
appear to be reasonably designed pursuant to 
Section 15E(h)(1) to prevent the occurrence 
of the prohibited conflict of interest in Rule 
17g-5(c)(7). The NRSRO’s policies and proce-
dures allowed employees to receive gifts with 
a specified limited dollar amount, but did not 
limit such gifts to items provided in the context 
of normal business activities such as meetings. 
The Staff recommended that the NRSRO 
establish, maintain, and enforce written policiesS TA F F  R E P O R T   |   17

and procedures reasonably designed to ensure 
that it does not issue or maintain credit ratings 
subject to the prohibited conflict of interest 
specified in Rule 17g-5(c)(7). 

(4) The NRSRO appeared to misrepresent the 
effect of its registration as an NRSRO in certain 
rating reports. The NRSRO made a statement 
in several reports accompanying a non-credit 
rating product that appeared to misrepresent 
the effect of the NRSRO’s registration as an 
NRSRO and could lead recipients of the reports 
to mistakenly conclude that such product is 
an NRSRO rating. The Staff also noted that 
certain templates for reports and letters of the 
NRSRO potentially could result in misrepre-
sentations or false statements in the future. The 
Staff recommended that the NRSRO revise its 
templates for reports and letters so that they do 
not contain any statements about its registration 
with the SEC as an NRSRO that are incorrect 
or misleading or that misrepresent the effect of 
such registration. 

(5) The NRSRO’s policies and procedures for the 
receipt, retention, and treatment of complaints 
appeared to improperly exclude certain 
complaints. The Staff recommended that the 
NRSRO revise its policies and procedures for the 
receipt, retention, and treatment of complaints 
to ensure that they cover all complaints contem-
plated under Section 15E(j)(3).  

(6) The NRSRO’s policies and procedures did 
not appear to require the disclosure of the 
information that Rule 17g-7(a)(1)(ii)(J)(3)(i) 
and (J)(3)(ii) require for rating revisions and 
affirmations, respectively, resulting from a 

look-back review. The Staff recommended that 
the NRSRO establish, maintain, and enforce 
policies and procedures that are reasonably 
designed to ensure that the information required 
by Rule 17g-7(a)(1)(ii)(J)(3) is included with 
the publication of a revised credit rating or 
affirmation following a look-back review that 
determines that a conflict of interest had influ-
enced the rating.

h. Small NRSRO #2

(1) The NRSRO did not appear to adhere to Rule 
17g-7(a) and its policies and procedures with 
regard to the publication of an information 
disclosure form for a credit rating withdrawal. 
Such policies and procedures did not appear to 
accurately reflect the Rule 17g-7(a) disclosure 
requirements, and the NRSRO did not publish 
a required information disclosure form for 
the withdrawal. Also, the NRSRO did not 
appear to generate a certain report as the 
NRSRO’s policies and procedures require. The 
Staff recommended that the NRSRO ensure it 
adheres to its policies and procedures, and all 
applicable requirements under Rule 17g-7(a), 
when it withdraws a credit rating. 

(2) The NRSRO did not appear to have effective 
internal controls pursuant to Section 15E(c)
(3)(A) governing surveillance of certain ratings 
and did not appear to adhere to the applicable 
methodology. Specifically, the NRSRO did 
not perform surveillance of a credit rating in 
accordance with the enumerated time period in 
the NRSRO’s methodology. Also, such method-
ology did not clearly indicate how frequently 
the NRSRO must conduct surveillance on such 
rating. The Staff recommended that the NRSRO 



18  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

enhance its internal controls with respect to its 
policies and procedures governing surveillance 
of certain credit ratings. The Staff also recom-
mended that the NRSRO ensure that it adheres 
to the applicable methodology. 

(3) The NRSRO did not appear to have effective 
internal controls pursuant to Section 15E(c)(3)
(A) governing the review and testing of its credit 
rating models. Specifically, the NRSRO used 
a model in determining credit ratings which 
contained data that was not consistent with the 
NRSRO’s policies and procedures. Such model 
also contained errors with one or more formula 
references. The Staff recommended that the 
NRSRO enhance its internal controls governing 
the review and testing of its credit rating models.

i. Small NRSRO #3

(1) The NRSRO did not appear to have effective 
internal controls pursuant to Section 15E(c)(3)
(A) with respect to credit ratings that are linked 
to other credit rating actions. Specifically, the 
NRSRO took a rating action on an outstanding 
credit rating without taking appropriate 
action with respect to a linked credit rating, 
and the NRSRO did not have an effective 
internal control at the relevant time to ensure 
that the NRSRO takes such action. The Staff 
recommended that the NRSRO establish, 
maintain, enforce, and document effective 
internal controls to ensure that it correctly issues 
and maintains credit ratings that are linked to 
other credit rating actions.

4. Responses to Recommendations from  

the 2020 Section 15E Examinations

To assess whether NRSROs appropriately 
addressed findings from the 2020 Section 15E 
examinations, the Staff reviewed each NRSRO’s 
written response describing its planned remedial 
measures, and participated in calls with each 
NRSRO to discuss its written response.

During the 2021 Section 15E examinations, the 
Staff assessed each NRSRO’s progress in imple-
menting 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 the Staff may 
not be able to fully assess the effectiveness of these 
measures during the 2021 examination. 

The Staff has determined all findings from the  
2020 Section 15E examinations have been appro-
priately addressed, except in one instance. In such 
instance, the Staff issued a finding relating to a 
small NRSRO’s revenue recognition practices 
related to the NRSRO’s obligations under Rule 
17g-5(c)(1) and recommended that the NRSRO 
establish, maintain, and enforce policies and 
procedures that are reasonably designed to ensure 
that it does not issue or maintain ratings subject to 
the Rule 17g-5(c)(1) prohibited conflict of interest. 
However, as discussed further in Section III.C.3(g), 
the Staff observed in the 2021 examination that, 
despite efforts to address the previous finding, 
the NRSRO did not appear to have reasonably 



	 S TA F F  R E P O R T   |   19

designed procedures to ensure accurate, reliable, 
and consistent revenue information to effectively 
monitor and prevent the occurrence of the conflict 
of interest identified in Rule 17g-5(c)(1). Except  
for such instance, NRSROs generally addressed 
2020 recommendations 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.

5. Essential Findings Trends

Chart 2 depicts the percentage of essential find- 
ings by Section 15E Review Area for all NRSROs  
from the Section 15E examinations conducted 
from 2016 to 2021. Of the 487 total essential 
findings arising from the Section 15E examinations 
conducted from 2016 to 2021, internal supervisory 
controls, adherence, and conflicts of interest were 
the top Section 15E Review Areas, accounting for 
42.3%, 30.6%, and 11.5%, respectively, of all 
essential findings.

The other five Section 15E Review Areas each 
accounted for less than 5% of the total essential 
findings from 2016 to 2021. Certain essential 
findings may relate to more than one Section 
15E Review Area but are categorized in only one 
category for counting purposes. For example, the 
Staff did not make any essential findings based 
solely on an NRSRO’s implementation of ethics 
policies and procedures, as such essential findings 
were accounted for in other Section 15E Review 
Areas. OCR continues to review all eight statutorily 
mandated review areas as required by Section 15E, 
described in Section III.A.

Chart 2. Essential Findings by Section 
 15E Review Area: 2016 to 2021

Internal Supervisory Controls 42.3%
Governance 4.3% 
DCO Activities 3.3%
Complaints 3.9%
Post-Employment 4.1%
Adherence 30.6%
Conflicts of Interest 11.5%
Ethics Policies 0.0%

42.3%

3.9%

3.3%

4.3%

4.1%

30.6%

11.5%

0.0%

Chart 3 shows the number of essential findings by 
Section 15E Review Area from the Section 15E 
examinations conducted from 2016 to 2021. The 
number of essential findings from the 2016 exami-
nation cycle was higher in several review areas, 
which was likely related to the new and amended 
rules that became effective in 2015.21 Essential 
findings have generally decreased in subsequent 
exam cycles, which indicates the NRSROs’ greater 
awareness of applicable laws and their obligations 
as regulated entities.

21	 See note 21.



20  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Chart 3. Number of Essential Findings by Section 15E Review Area: 2016 to 2021

0

10

20

30

40

50

60

70

80

Post-
Employment

ComplaintsDCO
Activities

GovernanceInternal
Supervisory

Controls

Ethics
Policies

Conflicts
of Interest

Adherence

2016 2017 2018 2019 2020 2021

From the Section 15E examinations conducted 
from 2016 to 2021, there were 147 essential 
findings for large NRSROs, 145 essential findings 
for medium NRSROs, and 195 essential findings 
for small NRSROs.22 Chart 4 shows the average 
number of essential findings the large, medium,  
and small NRSROs for each examination cycle 

from 2016 to 2021. From 2016 to 2021, the large 
NRSROs had an average of 8.2 essential findings 
per exam cycle, the medium NRSROs had an 
average of 8.1 essential findings per exam cycle, 
and the small NRSROs had an average of 8.6 
essential findings per exam cycle.

Chart 4. Average Number of Essential Findings by Large, Medium, and Small NRSROs: 2016 to 2021

0

2

4

6

8

10

12

14

16

18

202120202019201820172016

Medium NRSROs Small NRSROsLarge NRSROs

22	 The number of essential findings is based on the findings identified in prior summary reports of the Staff’s examinations 
of NRSROs pursuant to Section 15E(p)(3). For purposes of this Section of the Report, MCR is considered a “small 
NRSRO” for the Section 15E examinations conducted in 2016, 2017, 2018, and 2019.



	 S TA F F  R E P O R T   |   21

IV. STATE OF COMPETITION, 
TRANSPARENCY, AND 

CONFLICTS OF INTEREST

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, the 
small and medium NRSROs continue to compete 
with the large NRSROs with each increasing its 
total number of ratings outstanding as compared 
to declines among two of the large NRSROs. 
The information also suggests that some medium 
NRSROs have gained ratings share in the asset-
backed securities category. None of the small 
NRSROs is registered with the Commission in the 
asset-backed securities category.23

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 regis-
tered.24 This information, for the calendar year 
ending December 31, 2020, is summarized in 
Charts 5 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 5 depicts the number of credit ratings 
each NRSRO had outstanding in each rating 
category for which it was registered as of 
December 31, 2020. 

	■ Chart 6 shows the percentage change of credit 
ratings outstanding from 2019 to 2020 for  
each NRSRO.

23	 See Chart 1. As discussed in Section IV.A.2 of this Report, information available on the websites of Commercial Mortgage 
Alert (https://www.greenstreet.com/news/library/commercial-mortgage-alert) and Asset-Backed Alert (https://www.
greenstreet.com/news/library/asset-backed-alert) regarding NRSRO market shares in the asset-backed securities category 
indicates that some of the medium NRSROs have developed significant market shares in such rating category over the 
past few years. In addition, Section IV.A.2 of this Report provides examples of certain asset classes in which it has been 
reported that medium NRSROs have gained market share. 

24	 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. 

https://www.greenstreet.com/news/library/commercial-mortgage-alert
https://www.greenstreet.com/news/library/asset-backed-alert
https://www.greenstreet.com/news/library/asset-backed-alert


22  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

	■ Chart 7 illustrates the relative size of each rating 
category based on the aggregate number of 
ratings reported outstanding by all NRSROs. 

	■ Chart 8 shows the percentage change of credit 
ratings outstanding from 2019 to 2020 for 
large NRSROs compared to small and medium 
NRSROs across all rating categories.

	■ Chart 9 depicts the percentage of ratings  
each NRSRO had outstanding across all  
rating categories other than the government 
securities category. 

	■ Chart 10 depicts the percentage of ratings each 
NRSRO had outstanding in the government 
securities category.

While comparing the number of ratings outstanding 
among NRSROs (Chart 5) illustrates one dimension 
of the current state of competition, comparing the 
number of ratings issued by such NRSROs in a 
given period provides a more real-time picture of 
competition among NRSROs. For example, certain 
NRSROs (particularly the large NRSROs) have a 
longer history of issuing ratings and their ratings 
include those for debt obligations and obligors that 
were rated well before the establishment of the 
newer entrants.25 Consequently, the information 
described in Section IV.A.2 of this Report (relating 

to recent market share developments in the asset-
backed securities rating category), which provides 
information about ratings issued each year since 
2019, may provide additional insight regarding 
competition 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.26 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 on Item 3 of Form NRSRO.

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.27

25	 The ratings counts disclosed on Item 7A of Form NRSRO include outstanding credit ratings, regardless of when they 
were issued. As a result, the ratings counts of the more established NRSROs may include credit ratings that were issued 
before the newer entrants began issuing credit ratings. 

26	 For example, AMB has traditionally focused on rating insurance companies and their affiliates.
27	 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 disclosures on Item 7A of Form NRSRO 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 to Item 7A of Form NRSRO). It may be more difficult to draw rating comparisons 
to rating counts disclosed prior to January 1, 2015.

https://www.govinfo.gov/content/pkg/FR-2014-09-15/pdf/2014-20890.pdf


	 S TA F F  R E P O R T   |   23

Chart 5 provides the number of outstanding credit 
ratings reported by each NRSRO in its annual 
certification for the calendar year ending December 
31, 2020, 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 2019 to 2020. 

Chart 6 provides a visual representation of the 
year-over-year changes in each firm’s percentage 
share of the aggregate number of NRSRO ratings 
outstanding from 2019 to 2020.

Chart 5. Number of Outstanding Credit Ratings as of December 31, 2020 by Rating Category

NRSRO
Financial 

Institutions
Insurance 

Companies
Corporate 

Issuers

Asset-
Backed 

Securities

Government 
Securities

Total 
Ratings

Year-Over-Year 
Change in  

Total Ratings  
(2019 to 2020)

AMB N/R 7,251 985 5 N/R 8,241 0.82%

DBRS 11,214 192 4,327 23,482 22,556 61,771 6.76%

EJR 10,119 975 9,339 N/R N/R 20,433 13.81%

Fitch 33,440 3,198 20,318 34,108 177,665 268,729 -3.42%

HR 796 N/R 396 N/R 469 1,661 19.41%

JCR 950 86 2,971 N/R 348 4,355 4.61%

KBRA 1,326 132 224 14,470 141 16,293 13.52%

MIS 34,540 2,557 32,738 47,411 560,892 678,138 -0.52%

S&P 50,798 6,846 55,758 36,821 927,144 1,077,367 0.79%

Total 143,183 21,237 127,056 156,297 1,689,215 2,136,988 0.20%

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.

Source: NRSRO annual certifications for the 2019 and 2020 calendar years, Item 7A on Form NRSRO.

Chart 6. Year-Over-Year Changes in Percentage Share of Total Number of Ratings Outstanding from 2019 – 2020

0.00%

-0.6

-0.5

-0.4

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

S&PMISKBRAJCRHRFitchEJRDBRSAMB

Year-Over-Year Change

0.18%
0.11%

-0.47%

0.01% 0.01%
0.09%

-0.23%

0.30%

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

Source: NRSRO annual certifications for the 2019 and 2020 calendar years, Item 7A on Form NRSRO.



24  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Chart 7 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 registered, as

reported by each NRSRO in its annual certification 
for the calendar year ending December 31, 2020, as 
well as the percentage increase or decrease in total 
ratings from 2019 to 2020.28

Chart 7. Percentage by Rating Category of Each NRSRO’s Outstanding Credit Ratings  
of the Total Outstanding Credit Ratings of all NRSROs as of December 31, 2020

NRSRO
Financial 

Institutions
Insurance 

Companies
Corporate 

Issuers

Asset-
Backed 

Securities

Government 
Securities

Total Ratings

Change in 
% of Total 

Ratings from 
2019 to 2020

AMB N/R 34.1% 0.8% 0.0% N/R 0.4% 0.00%

DBRS 7.8% 0.9% 3.4% 15.0% 1.3% 2.9% 0.18%

EJR 7.1% 4.6% 7.4% N/R N/R 1.0% 0.11%

Fitch 23.4% 15.1% 16.0% 21.8% 10.5% 12.6% -0.47%

HR 0.6% N/R 0.3% N/R 0.0% 0.1% 0.01%

JCR 0.7% 0.4% 2.3% N/R 0.0% 0.2% 0.01%

KBRA 0.9% 0.6% 0.2% 9.3% 0.0% 0.8% 0.09%

MIS 24.1% 12.0% 25.8% 30.3% 33.2% 31.7% -0.23%

S&P 35.5% 32.2% 43.9% 23.6% 54.9% 50.4% 0.30%

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-tenth of one percent and nearest one-hundredth of one percent 
with respect to the change from 2019 to 2020.

Source: NRSRO annual certifications for the 2019 and 2020 calendar years, Item 7A on Form NRSRO.

The large NRSROs accounted for 94.7% of 
all the ratings outstanding as of December 31, 
2020—slightly lower than their 95.1% share as 
of December 31, 2019.29 The share of outstanding 
credit ratings of the large NRSROs decreased in all

five categories, most significantly in the financial 
institutions, corporate issuers, and asset-backed 
securities categories, which each decreased by at 
least 1.5 percentage points.

28	 For example, according to Chart 5, AMB reported that it had 7,251 insurance company credit ratings, and the total 
of the credit ratings in that category reported by all NRSROs was 21,237. Therefore, the percentage of NRSRO 
insurance company ratings attributable to AMB was approximately 34.1% (i.e., 7,251 divided by 21,237, expressed as a 
percentage), as shown on Chart 7.

29	 In 2007, the year when NRSROs began reporting outstanding ratings on Form NRSRO, the large NRSROs accounted 
for 98.8% of all outstanding ratings.



	 S TA F F  R E P O R T   |   25

Charts 5 and 7 also show that AMB, one of the 
medium NRSROs, had the most credit ratings 
outstanding in the insurance category. In each of the 
past seven years, AMB reported that it had the most 
credit ratings outstanding in the insurance category.30

Chart 8 shows the percentage change of total 
ratings outstanding per asset class from 2019 to 
2020 when comparing large NRSROs to small  
and medium NRSROs.

Chart 8. Percentage Change of Total Ratings Outstanding Per Asset Class  
2019 to 2020 – Large NRSROs Compared to Small/Medium NRSROs

-6

-4

-2

0

2

4

6

8

10

12

14

Gov't 
Securitites

(Med/Small)

Gov't
Securities
(Large)

ABD
(Med/Small)

ABS 
(Large)

Corporate 
Issuers 

(Med/Small)

Corporate 
Issuers
(Large)

Insurance
(Med/Small)

Insurance
(Large)

Financial 
Institutions

(Med/Small)

Financial
 Institutions 

(Large)

Year-Over-Year Change

-3.73%

9.55%

-0.13%

12.45%

1.46%

10.70%

-1.05%

4.73%

-1.02%

8.26%

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

Source: NRSRO annual certifications for the 2019 and 2020 calendar years, Item 7A on Form NRSRO.

30	 See 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.

https://www.sec.gov/ocr/ocr-reports-and-studies.html


26  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Chart 9 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, 2020.

Chart 9. Breakdown of Ratings Reported Outstanding by 
Rating Category as of December 31, 2020

Government Securities 79.0%
Financial Institutions 6.7%
Insurance Companies 1.0%
Corporate Issuers 5.9%
Asset-Backed Securities 7.3%

79.0% 5.9%

1.0%

6.7%

7.3%

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

Source: NRSRO annual certifications for the 2020 
calendar year, Item 7A on Form NRSRO.

As illustrated by Chart 9, as of December 31, 
2020, the largest proportion of the aggregate 
credit ratings reported to be outstanding were in 
the government securities 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 7 and Chart 12, 
is also the most concentrated rating category, with 
the large NRSROs accounting for 98.6% of all 
outstanding government ratings.

Chart 10 depicts the percentages of the credit 
ratings outstanding that are attributable to each 
NRSRO over all the rating categories, as reported 
by each NRSRO in its annual certification for the 
calendar year ending December 31, 2020. 

Chart 10. Breakdown of Ratings Reported Outstanding by 
NRSRO as of December 31, 2020

S&P 50.4%
AMB 0.4% 
DBRS 2.9%
EJR 1.0%
Fitch 12.6%
HR 0.1%
JCR 0.2%
KBRA 0.8%
MIS 31.7%

50.4%

2.9%
.04%

0.2%

12.6%
31.7%

0.8%

1.0%

0.1%

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

Source: NRSRO annual certifications for the 2020 
calendar year, Item 7A on Form NRSRO.



	 S TA F F  R E P O R T   |   27

Chart 11 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, as reported 
by each NRSRO in its annual certification for the 
calendar year ending December 31, 2020.

Chart 11. Breakdown of Non-Government Securities 
Ratings Reported Outstanding by NRSRO as of  

December 31, 2020

S&P 33.5%
AMB 1.8% 
DBRS 8.8%
EJR 4.6%
Fitch 20.3%
HR 0.3%
JCR 0.9%
KBRA 3.6%
MIS 26.2%

33.5%
8.8%

1.8%

0.9%

20.3%
26.2%

3.6%

4.6%

0.3%

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

Source: NRSRO annual certifications for the 2020 
calendar year, Item 7A on Form NRSRO.

Chart 12 depicts the percentages of the credit 
ratings outstanding that are attributable to each 
applicable NRSRO in the government securities 
category, as reported by each NRSRO in its annual 
certification for the calendar year ending December 
31, 2020.

Chart 12. Breakdown of Government Securities Ratings 
Reported Outstanding on December 31, 2020

S&P 54.89%
DBRS 1.34%
Fitch 10.52%
HR 0.03%
JCR 0.02%
KBRA 0.01%
MIS 33.20%

54.89%

1.34%

0.02%

10.52%

33.20%

0.03%

0.01%

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.

Source: NRSRO annual certifications for the 2020 
calendar year, Item 7A on Form NRSRO.

A comparison of Chart 10 to Chart 11 illus-
trates that there is less concentration in the 
non-government securities rating categories. S&P’s 
and MIS’s percentage share of all outstanding 
ratings declines by 16.9 and 5.5 percentage points, 
respectively, when government securities are 
excluded. Fitch’s percentage share of outstanding 
ratings, on the other hand, increases by 7.8 
percentage points when government securities 
are excluded. The percentage share for all 
the remaining NRSROs also increases when 
government securities are excluded. Chart 10  



28  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

again shows that the government securities 
category makes up the largest number of credit 
ratings reported across all categories and is the 
most concentrated within the three large NRSROs.

Further, when government securities are included 
in the total calculation, each of the small and 
medium NRSROs, except for DBRS and EJR, has 
1.0% 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 the categories in which

they are active can be observed, as illustrated in 
Chart 11. The percentage share of each small and 
medium NRSRO for all rating categories other 
than government securities as of December 31, 
2020 did not change significantly compared to its 
percentage share as of December 31, 2019.31

b. NRSRO Analytical Staffing Levels

Chart 13 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.32

Chart 13. NRSRO Credit Analysts and Credit Analyst Supervisors

NRSRO
Credit Analysts (Including 

Credit Analyst Supervisors)
Credit Analyst 
Supervisors

% Change in Analytical Staff 
(Including Supervisors)  

from 2019 to 2020

AMB 160 62 3.9%

DBRS 428 131 -9.9%

EJR 25 12 8.7%

Fitch 1,301 331 1.9%

HR 63 10 21.2%

JCR 62 30 0.0%

KBRA 176 54 2.3%

MIS 1,830 271 5.7%

S&P 1,560 122 0.1%

Total 5,605 1,023 1.8%

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

Source: Exhibit 8 to Form NRSRO, in effect as of each NRSRO’s annual certification for the 2020 calendar year filed 
on or before March 31, 2021.

31	 A comparison of Chart 11 in this Report with Chart 5 in Section IV.A.1 of the December 2020 Annual Report (available 
at https://www.sec.gov/files/2020-annual-report-on-nrsros.pdf) shows that each small and medium NRSRO’s total 
non-government market share as of December 31, 2020 remained constant or increased modestly compared to the 
market shares as of December 31, 2019. 

32	 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).

https://www.sec.gov/files/2020-annual-report-on-nrsros.pdf


	 S TA F F  R E P O R T   |   29

The large NRSROs report employing 4,691 credit 
analysts (including supervisors), which is approxi-
mately 83.7% of the total number employed by all 
of the NRSROs. The small and medium NRSROs, 
in the aggregate, employ approximately 16.3% of 
all credit analysts employed by NRSROs.33 Some 
of the small NRSROs have reported significant 
increases in their analytical staff. Between the 2019 
and 2020 calendar years, the number of credit 
analysts (including credit analyst supervisors) 
employed by small NRSROs, in the aggregate, 
increased 9.5%, compared to an increase of 2.7% 
at the large NRSROs, in the aggregate. Between the 
2019 and 2020 calendar years, the number of

credit analysts (including credit analyst supervisors) 
employed by medium NRSROs, in the aggregate, 
decreased 4.6%.34 

c. NRSRO Revenue

Chart 14 shows the percentage of total NRSRO 
revenues since 2017 attributable to the large 
NRSROs, medium NRSROs, and small NRSROs.35 
With the exception of fiscal year 2020, the percent- 
age of aggregate NRSRO revenue reported by the 
large NRSROs has gradually declined over this time 
period and the percentage of total revenue reported 
by the medium and small NRSROs has correspond-
ingly gradually increased. 

Chart 14. NRSRO Fiscal Year Revenue as a Percentage of Aggregate Reported Revenue

2020 2019 2018 2017

Large NRSROs 94.1% 93.3% 93.5% 94.1%

Medium NRSROs 5.1% 5.9% 5.8% 5.3%

Small NRSROs 0.8% 0.8% 0.7% 0.6%

Total 100.0% 100.0% 100.0% 100.0%

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

Source: Financial reports filed with the Commission under Rule 17g-3(a)(3) for the fiscal years ended 2017 through 
2020. 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.

33	 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, and 17.0% of all NRSRO analysts in 2019. 

34	 As described in the December 2020 Annual Report, in 2019, DBRS and MCR combined analytical operations 
following a corporate combination. Prior to the combination, the two NRSROs had reported a total of 515 analysts 
as of December 31, 2019. At the end of 2019, the combined entity had a total of 475 analysts. At the end of 2020, the 
combined entity had a total of 428 analysts. The reduction in analytical staff at the combined entity may be the primary 
driver behind the overall reduction among the medium-sized NRSROs.

35	 Under Rule 17g-3(a)(3), each NRSRO is required to file annually with the Commission an unaudited report providing 
revenue information, including revenue from determining and maintaining credit ratings, revenue from subscribers, 
revenue from granting licenses or rights to publish credit ratings, and revenue from other services and products. These 
reports are not required to be made publicly available by the NRSROs.



30  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Further revenue information is available for 
NRSROs that are owned, in whole or in part, by 
public companies. The following information is 
from the 2020 annual reports of public companies 
with an ownership interest in an NRSRO:

	■ Moody’s Corporation, which is MIS’s parent 
company, reported a 15% increase in external 
revenue at MIS compared to 2019 results. The 
increase, according to the report, was largely 
driven by higher corporate debt issuance 
(both investment-grade and high-yield) as 
issuers bolstered liquidity positions in response 
to COVID-19 uncertainties and issued 
opportunistically for refinancing needs. The 
corporate finance group, financial institutions 
group, and public, project and infrastructure 
finance group of MIS had an increase in revenue 
compared to 2019 results. In comparison, the 
structured finance group of MIS had a decrease 
in revenue compared to 2019 results.36

	■ S&P Global Inc. (S&P Global), which is  
S&P’s parent company, indicated that revenue 
at S&P increased by 16% compared to its 
2019 results, due to an increase in transaction 
revenue. S&P Global attributed the increase 
in S&P’s revenue to an increase in corporate 
bond ratings revenue primarily driven by higher 
corporate bond issuance in the U.S. mainly 
resulting from borrowers’ need for increased 
liquidity in light of the COVID-19-related 
economic downturn, historically low borrowing 
costs, and central bank lending actions initially 
announced at the end of the first quarter of 
2020. This was partially offset by a decrease 
in bank loan ratings revenue and structured 
finance revenues.37

36	 See Moody’s Corporation, Annual Report on Form 10-K for the year ended December 31, 2020, available at  
https://www.sec.gov/ix?doc=/Archives/edgar/data/1059556/000105955621000010/mco-20201231.htm. 

37	 See S&P Global Inc., Annual Report on Form 10-K for the year ended December 31, 2020, available at  
https://www.sec.gov/ix?doc=/Archives/edgar/data/64040/000006404021000063/spgi-20201231.htm. 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1059556/000105955621000010/mco-20201231.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/64040/000006404021000063/spgi-20201231.htm


	 S TA F F  R E P O R T   |   31

	■ Morningstar, Inc. (Morningstar), which is 
DBRS’s parent company, reported that for 
the year ended December 31, 2020, DBRS’s 
revenue was $207.3 million, accounting for 
14.9% of Morningstar’s consolidated revenue. 
Morningstar reported that its transaction-
based revenue grew 49.2% during 2020, 
primarily driven by the contribution of 
DBRS—approximately 59.9% of the revenue 
generated by DBRS came from one-time, 
transaction-based fees driven by its provision 
of ratings on newly issued securities, with the 
remainder comprised of recurring revenue from 
surveillance, credit research, or other services. 
Morningstar attributed strong Canadian 
corporate credit issuances as the primary driver 
of DBRS’s revenue growth for 2020.38

Recent regulatory filings also show increases in 
revenue at MIS and S&P in the first half of 2021. 
Moody’s Corporation reported a 16% increase in 
MIS external revenue in the first half of 2021, as 
compared to the first half of 2020, due to strong 
growth mainly driven by leveraged finance

issuance as issuers refinanced existing debt and 
funded M&A activity, and increased CLO and 
commercial mortgage-backed securities (CMBS) 
activity amid favorable market conditions.39 S&P 
Global reported a 14% increase in S&P transaction 
revenue in the first half of 2021, as compared to 
the first half of 2020, due to an increase in bank 
loan ratings revenue driven by increased M&A 
activity and an increase in structured finance 
revenue primarily driven by increased issuance 
of U.S. CLOs, partially offset by a decrease in 
corporate bond ratings revenue driven by decreased 
investment-grade issuance volumes.40 

Morningstar, Inc. reported a 29.4% increase 
in DBRS revenue in the first half of 2021, as 
compared to the first half of 2020, due to stronger 
issuance activity in both commercial mortgage-
backed and asset-backed securities, which offset 
lower issuance activity in the Canadian corporate 
markets. Recurring annual fees tied to surveillance, 
research, and other transaction-related services 
represented 36.5% of DBRS’s revenue in the first 
six months of 2021.41 

38	 See Morningstar, Inc., Annual Report on Form 10-K for the year ended December 31, 2020, available at https://www.sec.
gov/ix?doc=/Archives/edgar/data/1289419/000128941921000039/morn-20201231.htm.

39	 See Moody’s Corporation, Quarterly Report on Form 10-Q for the period ended June 30, 2021, available at https://www.
sec.gov/ix?doc=/Archives/edgar/data/0001059556/000105955621000025/mco-20210630.htm.

40	 See S&P Global Inc., Quarterly Report on Form 10-Q, for the period ended June 30, 2021, available at https://www.sec.
gov/ix?doc=/Archives/edgar/data/64040/000006404021000155/spgi-20210630.htm. 

41	 See Morningstar, Inc., Quarterly Report on Form 10-Q for the period ended June 30, 2021, available at https://www.sec.
gov/ix?doc=/Archives/edgar/data/1289419/000128941921000186/morn-20210630.htm.

https://www.sec.gov/ix?doc=/Archives/edgar/data/1289419/000128941921000039/morn-20201231.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/1289419/000128941921000039/morn-20201231.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001059556/000105955621000025/mco-20210630.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001059556/000105955621000025/mco-20210630.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/64040/000006404021000155/spgi-20210630.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/64040/000006404021000155/spgi-20210630.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/1289419/000128941921000186/morn-20210630.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/1289419/000128941921000186/morn-20210630.htm


32  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

2. Developments in the State of Competition 

Among NRSROs

a. Market Share Observations in the Asset-

Backed 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 7 indicates that, 
as of December 31, 2020, the medium NRSROs 
collectively had 24.3% of the ratings outstanding 
in the asset-backed securities rating category. 
However, the market share data discussed in 
this Section IV.A.242 shows that higher market 
share percentages have been obtained by medium 
NRSROs in recent years for ratings issuance with 
respect to certain types of asset-backed securities.

This market share data continues the growth  
trend the Staff has observed since 2011 for some 
medium NRSROs in the asset-backed securities 
rating category.43 

Section IV.A.2.a.i and 2.a.ii below discuss 
NRSRO market share information with respect 
to certain asset-backed securities, as reported on 
the Commercial Mortgage Alert and Asset-Backed 
Alert websites.44 Commercial Mortgage Alert 
shares information on one category of asset-backed 
securities: CMBS.45 Asset-Backed Alert reports 
NRSRO market share information on three 
categories of asset-backed securities: (i) ABS;46  
(ii) MBS;47 and (iii) CLO.48

42	 Unless noted otherwise, all market share percentages in this Section IV.A.2 are based on dollar amounts of issuance. The 
information in this Section IV.A.2 is from the Asset-Backed Alert’s ABS database as of July 26, 2021.

43	 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 5, it only has five outstanding asset-backed securities 
ratings as of December 31, 2020, all of which were issued before 2019. For these reasons, this section only discusses 
observations related to DBRS, Fitch, KBRA, MIS, and S&P, which are the five NRSROs with current rating activity in the 
asset-backed securities category.

44	 See Commercial Mortgage Alert website, available at https://www.greenstreet.com/news/library/commercial-mortgage-
alert and Asset-Backed Alert website, available at https://www.greenstreet.com/news/library/asset-backed-alert. The 
information in Charts 15 through 18 is based on the Commercial Mortgage Alert’s CMBS database as of July 26, 2021, 
and the information in Charts 19 through 21 is based on the Asset-Backed Alert’s ABS database as of July 26, 2021. 
Although the information available on these websites 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.

45	 The “CMBS” category is comprised of transactions collateralized by mortgages or leases on commercial or multi-family 
income-producing properties (excluding commercial real estate collateralized debt obligations). See Commercial Mortgage 
Alert website, available at https://www.greenstreet.com/news/library/commercial-mortgage-alert. 

46	 The “ABS” category is comprised of securities that are collateralized by assets other than the following: CMBS; MBS; 
Fannie Mae and Freddie Mac issues (other than risk transfer transactions); issuances by municipalities; tax exempt 
issues; issues that are fully retained by an affiliate of the deal sponsor; commercial paper and other continuously offered 
securities such as medium-term notes; CLOs and other collateralized debt obligations; and refinancing of previously offered 
securities. See Asset-Backed Alert website, available at https://www.greenstreet.com/news/library/asset-backed-alert.

47	 The “MBS” category is comprised of securities secured by U.S. first-lien mortgages on residential properties (excluding 
Fannie Mae and Freddie Mac issues, securities secured by non-performing or re-performing mortgages, subprime 
mortgages, or mortgages financing single-family rental businesses, and refinancings of previously offered securities). See id.

48	 The “CLO” category is comprised of arbitrage collateralized loan obligations secured by broadly syndicated corporate 
loans and middle market collateralized loan obligations secured by loans to small to medium sized enterprises. See id. 

https://www.greenstreet.com/news/library/commercial-mortgage-alert
https://www.greenstreet.com/news/library/commercial-mortgage-alert
https://www.greenstreet.com/news/library/asset-backed-alert
https://www.greenstreet.com/news/library/commercial-mortgage-alert
https://www.greenstreet.com/news/library/asset-backed-alert


	 S TA F F  R E P O R T   |   33

i. CMBS

Charts 15 through 18 provide information 
concerning U.S.49 CMBS ratings by NRSROs,50  
as reported in Commercial Mortgage Alert. 
NRSRO market share varies between the conduit 
CMBS and single-borrower CMBS segments,51 
the two segments 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 CMBS transactions, 
U.S. single-borrower CMBS transactions, and 
agency CMBS transactions54 for calendar year 
2019, calendar year 2020, and the first half of 
calendar year 2021.

49	 See id. 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”). Commercial Mortgage Alert website, available  
at https://www.greenstreet.com/news/library/commercial-mortgage-alert.

50	 For purposes of Charts 15 through 18, all rating activity for pre-integration DBRS, MCR, and DBRS has been aggregated 
and presented for DBRS for calendar year 2019. Please refer to the December 2020, January 2020, and December 2018 
Annual Reports for information for pre-integration DBRS and MCR, 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.

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%20Revised%202014%20-Update.pdf. In contrast, a single-borrower transaction includes commercial 
mortgage loans made to a single borrower. 

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 conduit CMBS, single-borrower CMBS, and other types of CMBS, such as 
distressed/non-performing CMBS transactions and re-securitizations of 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. See Commercial Mortgage Alert website, available at https://www.greenstreet.com/
news/library/commercial-mortgage-alert.

https://www.greenstreet.com/news/library/commercial-mortgage-alert
https://www.sec.gov/ocr/ocr-reports-and-studies.html
https://www.sec.gov/ocr/ocr-reports-and-studies.html
https://www.crefc.org/uploadedFiles/Site_Framework/Industry_Resources/Glossary%20Revised%202014%20-Update.pdf
https://www.crefc.org/uploadedFiles/Site_Framework/Industry_Resources/Glossary%20Revised%202014%20-Update.pdf
https://www.greenstreet.com/news/library/commercial-mortgage-alert
https://www.greenstreet.com/news/library/commercial-mortgage-alert


34  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Chart 15. Rating Agency Market Share for Total Non-Agency U.S. CMBS Issued in 2019, 2020, and First Half of 2021

1H-2021 
Rank

NRSRO
1H-2021 
Issuance  
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

2020 
Issuance 
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

2019 
Issuance 
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

1 Fitch 31,114 27 68.1/45.8 38,037 46 64.2/52.3 56,048 66 57.3/46.2

2 KBRA 23,053 20 50.4/33.9 25,825 32 43.6/36.4 45,924 56 47.0/39.2

3 DBRS 18,350 25 40.1/42.4 21,893 34 36.9/38.6 42,425 56 43.4/39.2

4 MIS 16,409 21 35.9/35.6 25,076 42 42.3/47.7 42,184 55 43.1/38.5

5 S&P 15,927 23 34.8/39.0 23,275 27 39.3/30.7 49,634 70 50.8/49.0

Total 
Rated 
Market

45,722 59 59,254 88 97,767 143

Chart 15 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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. 

Source: Based on information from the Commercial Mortgage Alert’s CMBS database as of July 26, 2021, available 
at https://www.greenstreet.com/news/library/commercial-mortgage-alert. For calendar year 2019, the Staff has 
adjusted the presentation of the information by aggregating individual pre-integration DBRS and MCR information 
to present the information consistently as a combined entity, DBRS. See note 43.

Chart 16. Rating Agency Market Share for U.S. Conduit CMBS Issued in 2019, 2020, and First Half of 2021

1H-2021 
Rank

NRSRO
1H-2021 
Issuance  
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

2020 
Issuance 
($Mil.)

No. of 
deals

Market 
Share %  
($)/(#)

2019 
Issuance 
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

1 Fitch 15,184 16 100.0/100.0 26,953 30 100.0/100.0 49,154 52 100.0/100.0

2 KBRA 12,244 13 80.6/81.3 17,400 20 64.6/66.7 32,755 36 66.6/69.2

3 S&P 11,409 11 75.1/68.8 14,769 14 54.8/46.7 35,582 36 72.4/69.2

4 DBRS 4,305 4 28.4/25.0 9,553 10 35.4/33.3 18,318 18 37.2/34.6

5 MIS 2,560 3 16.9/18.8 11,457 15 42.5/50.0 14,836 17 30.2/32.7

 
Total 
Rated 
Market

15,184 16   26,953 30   49,154 52  

Chart 16 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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.

Source: Based on information from the Commercial Mortgage Alert’s database as of July 26, 2021, available at 
https://www.greenstreet.com/news/library/commercial-mortgage-alert. For calendar year 2019, the Staff has 
adjusted the presentation of the information by aggregating individual pre-integration DBRS and MCR information 
to present the information consistently as a combined entity, DBRS. See note 43.

https://www.greenstreet.com/news/library/commercial-mortgage-alert
https://www.greenstreet.com/news/library/commercial-mortgage-alert


	 S TA F F  R E P O R T   |   35

Chart 17. Rating Agency Market Share for U.S. Single-Borrower CMBS Issued in 2019, 2020, and First Half of 2021

1H-2021 
Rank

NRSRO
1H-2021 
Issuance  
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

2020 
Issuance 
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

2019 
Issuance 
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

1 Fitch 15,930 11 52.2/25.6 8,582 12 36.1/25.5 6,894 14 15.0/16.9

2 DBRS 14,045 21 46.0/48.8 10,108 20 42.5/42.6 23,368 35 50.7/42.2

3 MIS 13,849 18 45.4/41.9 11,388 23 47.9/48.9 26,518 36 57.6/43.4

4 KBRA 10,809 7 35.4/16.3 7,231 9 30.4/19.1 12,506 18 27.2/21.7

5 S&P 4,517 12 14.8/27.9 3,154 8 13.3/17.0 12,638 30 27.4/36.1

Total 
Rated 
Market

30,537 43 23,776 47 46,060 83

Chart 17 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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.

Source: Based on information from the Commercial Mortgage Alert’s CMBS database as of July 26, 2021, available 
at https://www.greenstreet.com/news/library/commercial-mortgage-alert. For calendar year 2019, the Staff has 
adjusted the presentation of the information by aggregating individual pre-integration DBRS and MCR information 
to present the information consistently as a combined entity, DBRS. See note 43.

Chart 18. Rating Agency Market Share for Agency CMBS Issued in 2019, 2020, and First Half of 2021

1H-2021 
Rank

NRSRO
1H-2021 
Issuance  
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

2020 
Issuance 
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

2019 
Issuance 
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

1 Fitch 12,275 10 100.0/100.0 26,820 21 90.9/91.3 16,767 12 59.2/60.0

2 DBRS 8,954 7 72.9/70.0 15,011 12 50.9/52.2 15,995 11 56.5/55.0

3 KBRA 3,322 3 27.1/30.0 14,480 11 49.1/47.8 12,311 9 43.5/45.0

4 MIS 0 0 0.0/0.0 2,671 2 9.1/8.7 5,862 4 20.7/20.0

5 S&P 0 0 0.0/0.0 0 0 0.0/0.0 5,677 4 20.1/20.0

Total 
Rated 
Market

12,275 10 29,491 23 28,306 20

Chart 18 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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.

Source: Based on information from the Commercial Mortgage Alert’s CMBS database as of July 26, 2021, available 
at https://www.greenstreet.com/news/library/commercial-mortgage-alert. For calendar year 2019, the Staff has 
adjusted the presentation of the information by aggregating individual pre-integration DBRS and MCR information 
to present the information consistently as a combined entity, DBRS. See note 43.

https://www.greenstreet.com/news/library/commercial-mortgage-alert
https://www.greenstreet.com/news/library/commercial-mortgage-alert


36  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Charts 15 through 17 show that in 2019, 2020, and 
the first half of 2021 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.55 

As illustrated in Chart 15, in the first half of 2021, 
KBRA and DBRS had the second and third-highest 
market shares, respectively, in the non-agency U.S. 
CMBS segment. KBRA has consistently attained 
a market share of at least 43% in each of 2019, 
2020, and the first half of 2021, and DBRS has 
attained a market share of over 36% during the 
same time period.

The relative size of the U.S. conduit CMBS segment 
had been about half of the non-agency U.S. CMBS 
transactions in 2019 and 2020. In the first half 
of 2021, the U.S. conduit segment accounted for 
about a third of all non-agency U.S. CMBS trans-
actions.56 Fitch has continued to maintain market 
share in the U.S. conduit CMBS segment.

As illustrated in Chart 16, Fitch had the highest 
market share, measured by dollar value of issuance, 
in this segment during 2019, 2020, and the first 
half of 2021, rating all of the transactions over that 
period. KBRA had the third-highest market share, 
measured by dollar value of issuance, in the U.S. 
conduit CMBS segment in 2019, and the second-
highest ranking in 2020 and the first half of 2021. 
In each of 2017, 2018, 2019, 2020, and the first 
half of 2021, KBRA has rated more than half of 
these transactions. 

The relative size of the U.S. single-borrower segment 
was over 40% of the non-agency U.S. CMBS 
transactions in 2019 and 2020. In the first half of 
2021, the U.S. single-borrower segment accounted 
for about two-thirds of all non-agency U.S. CMBS 
transactions.57 DBRS gained market share in this 
segment, achieving the second highest market share 
in the first half of 2021, rating twenty-one of the 
forty-three transactions in the segment. 

55	 Non-agency U.S. CMBS issuance came to a near halt in March 2020 because of COVID-19. Issuance began to pick-up 
in the third and fourth quarters of 2020, but overall issuance in 2020 was down nearly 40% from 2019 due to 
COVID-19 and the resulting economic impact. See S&P Loses to Moody’s, Commercial Mortgage Alert, Jan. 22, 2021; 
CMBS Issuance Off 27% Year-Over-Year, Commercial Mortgage Alert, Oct. 2, 2020. Non-agency U.S. CMBS issuance 
continued to grow in the first half of 2021, with U.S. conduit CMBS transactions accounting for approximately 33% and 
U.S. single-borrower transactions accounting for 67%. See CMBS, CLO Issuers Prep for Busier 2nd Half, Commercial 
Mortgage Alert, July 9, 2021.

56	 U.S. conduit CMBS issuance has resumed, albeit more slowly than other non-agency U.S. CMBS segments, because it 
takes more time and effort than it did before COVID-19 to aggregate enough collateral for a transaction—investors 
continue to shy away from offerings that are backed by more than minimal amounts of loans on hotel and retail 
properties, which have suffered as a result of COVID-19. See CMBS, CLO Issuers Prep for Busier 2nd Half, Commercial 
Mortgage Alert, July 9, 2021; Election Day Looms Large for CMBS Issuers, Commercial Mortgage Alert, Oct. 2, 2020. 

57	 U.S. single-borrower sector issuance resumed in the third quarter of 2020 and continued to grow in the first half of 
2021 as lenders and investors have been attracted to securitizations of large loans tied to prominent borrowers and/or 
significant properties and portfolios during COVID-19. See CMBS, CLO Issuers Prep for Busier 2nd Half, Commercial 
Mortgage Alert, July 9, 2021; Election Day Looms Large for CMBS Issuers, Commercial Mortgage Alert, Oct. 2, 2020.S TA F F  R E P O R T   |   37

As illustrated in Chart 18, Fitch has continued 
to improve its market share in the agency CMBS 
segment. Fitch had the highest market share in 
this segment during 2019, 2020, and the first half 
of 2021. Over the same period, DBRS and KBRA 
had the second and third-highest market shares, 
respectively, in the agency CMBS segment.

ii. ABS/MBS/CLO

Charts 19 through 21 provide information 
concerning U.S. ABS, U.S. MBS, and U.S. CLO 
ratings by NRSROs,58 as reported in Asset-Backed 
Alert. The charts include reported market share 
information for these transactions for calendar 
years 2019, calendar year 2020, and the first half 
of calendar year 2021. 

Chart 19. Rating Agency Market Shares for U.S. ABS Issued in 2019, 2020, and First Half of 2021

1H-2021 
Rank

NRSRO
1H-2021 
Issuance  
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

2020 
Issuance 
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

2019 
Issuance 
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

1 S&P 92,741 148 49.5/45.7 159,396 239 58.3/47.9 193,378 317 57.6/53.9

2 MIS 88,584 97 47.3/29.9 114,383 157 41.8/31.5 143,742 203 42.8/34.5

3 Fitch 63,954 85 34.1/26.2 109,286 151 40.0/30.3 151,090 192 45.0/32.7

4 DBRS 61,933 111 33.1/34.3 76,121 168 27.8/33.7 107,086 201 31.9/34.2

5 KBRA 40,538 108 21.6/33.3 50,228 137 18.4/27.5 64,909 177 19.3/30.1

Total 
Rated 
Market

187,300 324 273,360 499 335,931 588

Chart 19 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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.

Source: Based on information from the Asset-Backed Alert’s ABS database as of July 26, 2021, available at  
https://www.greenstreet.com/news/library/asset-backed-alert. For calendar year 2019, the Staff has adjusted  
the presentation of the information by aggregating individual pre-integration DBRS and MCR information to  
present the information consistently as a combined entity, DBRS. See note 51.

58	 For purposes of Charts 19 through 21, all rating activity for pre-integration DBRS, MCR, and DBRS has been aggregated 
and presented for DBRS for calendar year 2019. Please refer to the December 2020, January 2020, and December 2018 
Annual Reports for information for pre-integration DBRS and MCR, 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.

https://www.sec.gov/ocr/ocr-reports-and-studies.html
https://www.sec.gov/ocr/ocr-reports-and-studies.html
https://www.greenstreet.com/news/library/asset-backed-alert
https://www.greenstreet.com/news/library/asset-backed-alert


38  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

Chart 20. Rating Agency Market Shares for U.S. MBS Issued in 2019, 2020, and First Half of 2021

1H-2021 
Rank

NRSRO
1H-2021 
Issuance  
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

2020 
Issuance 
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

2019 
Issuance 
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

1 Fitch 21,920 48 68.1/66.7 14,755 46 48.9/57.5 8,664 29 31.0/38.2

2 MIS 21,861 39 67.9/54.2 14,642 31 48.6/38.8 19,074 44 68.3/57.9

3 KBRA 9,051 22 28.1/30.6 10,576 25 35.1/31.3 13,126 33 47.0/43.4

4 DBRS 3,092 7 9.6/9.7 10,810 24 35.9/30.0 11,679 26 41.8/34.2

5 S&P 2,306 6 7.2/8.3 2,756 8 9.1/10.0 2,433 5 8.7/6.6

Total 
Rated 
Market

32,203 72 30,148 80 27,941 76

Chart 20 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The 
sum of the market share percentages exceeds 100% because more than one NRSRO may rate a particular trans-
action. Likewise, the aggregate issuance volume and number of deals represented above exceed the Total Rated 
Market values for each time period. 

Source: Based on information from the Asset-Backed Alert’s ABS database as of July 26, 2021, available at  
https://www.greenstreet.com/news/library/asset-backed-alert. For calendar year 2019, the Staff has adjusted the 
presentation of the information by aggregating individual pre-integration DBRS and MCR information to present the 
information consistently as a combined entity, DBRS. See note 51.

Chart 21. Rating Agency Market Shares for U.S. CLO Issued in First Half of 2019, 2020, and First Half of 2021

1H-2021 
Rank

NRSRO
1H-2021 
Issuance  
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

2020 
Issuance 
($Mil.)

No. of 
deals

Market 
Share % 
($)/(#)

2019 
Issuance 
($Mil.)

No. of 
deals

Market  
Share % 
($)/(#)

1 S&P 56,824 119 66.9/68.0 81,589 193 87.0/86.2 73,791 152 60.1/58.5

2 MIS 31,746 65 37.4/37.1 18,890 45 20.1/20.1 73,538 155 59.9/59.6

3 Fitch 16,878 34 19.9/19.4 32,815 72 35.0/32.1 79,889 166 65.1/63.8

4 KBRA 6,066 12 7.1/609 3,541 10 3.8/4.5 5,678 13 4.6/5.0

5 DBRS 2,588 3 3.0/1.7 330 1 0.4/0.4 3,424 8 2.8/3.1

Total 
Rated 
Market

84,983 175 93,785 224 122,716 260

Chart 21 reflects market share percentages based on dollar amounts of issuance and number of deals rated. The sum 
of the market share percentages exceeds 100% because more than one NRSRO may 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. 

Source: Based on information from the Asset-Backed Alert’s ABS database as of July 26, 2021, available at  
https://www.greenstreet.com/news/library/asset-backed-alert. For calendar year 2019, the Staff has adjusted the 
presentation of the information by aggregating individual pre-integration DBRS and MCR information to present the 
information consistently as a combined entity, DBRS. See note 51.

https://www.greenstreet.com/news/library/asset-backed-alert
https://www.greenstreet.com/news/library/asset-backed-alert


	 S TA F F  R E P O R T   |   39

Chart 19 shows that DBRS and KBRA have built 
and maintained significant U.S. ABS rating market 
shares.59 DBRS has consistently attained a market 
share of over 27% in each of 2019, 2020, and the 
first half of 2021, and KBRA has attained a market 
share of over 18% during the same time period.60 
For example, DBRS has been able to gain market 
share in rating more traditional types of asset-
backed securities (aside from the MBS and CMBS 
categories). As another example, DBRS rated 
95.1% of the transactions backed by student loans 
that priced during the first half of 2021.61 DBRS 
also rated 34.1% of the transactions backed by 
credit card transactions (one of the larger classes of 
asset-backed securities) that priced during the first 
half of 2021.62 DBRS has also been able to gain 
market share in auto-related asset-backed securities, 
rating 55.7% of the auto-fleet lease transactions, 

22.2% of the subprime auto loan transactions, 
5.6% of the prime auto loan transactions, and 
19.0% of the auto lease transactions that priced 
during the first half of 2021.63 KBRA has also 
established a market share in some of these 
auto-related asset-backed security categories, rating 
32% of the subprime auto loan transactions and 
3% of the prime auto loan transactions that priced 
during the first half of 2021.64 Chart 20 shows that 
the highest market shares for the U.S. MBS segment 
have been achieved by two of the large NRSROs. 
KBRA and DBRS had achieved market shares of 
over 40% in this segment in 2019, but have since 
seen their market share decrease in 2020 and the 
first half of 2021. DBRS and KBRA have, however, 
achieved notable market share in certain types of 
residential mortgage-backed securities not included 
in Chart 20. For example, DBRS rated 69% of the

59	 See also Section IV.A.2 of this Report for a discussion of additional ABS asset classes where these two NRSROs have 
reported success in gaining market share. 

60	 There was a significant reduction in U.S. ABS issuance volume in the second quarter of 2020 as COVID-19 caused vast 
financial market disruptions. Issuance began to resume in the third quarter of 2020, but overall U.S. ABS issuance in 2020 
was down nearly 19% from 2019 due to COVID-19. See After Bleak Year, Pros Eye Issuance Rebound, Asset-Backed 
Alert, Jan. 8, 2021; Worldwide Issuance Rebound Falling Flat, Asset-Backed Alert, Oct. 2, 2020. U.S. ABS issuance has 
been strong in the first half of 2021, with issuance up 52% from a year ago. See Second Half Kicking Off on $1 Trillion 
Tempo, Asset-Backed Alert, July 9, 2021; Worldwide Issuance On Pace for Banner Year, Asset-Backed Alert, Apr. 9, 2021.

61	 See Asset-Backed Alert’s ABS database indicates that twenty-three student loan transactions totaling $17.6 billion priced 
during the first half of 2021.

62	 The Asset-Backed Alert database lists 12 credit card transactions totaling $5.5 billion that priced during the first half of 
2021.

63	 See Asset-Backed Alert’s ABS database, which indicates that the following transactions were priced during the first  
half of 2021: 10 auto-fleet lease transactions totaling $8.9 billion, 32 subprime auto loan transactions totaling $20.7 
billion, 48 prime auto loan transactions totaling $44.3 billion, and 28 auto lease transactions totaling $25.7 billion.

64	 See id.



40  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

re-performing mortgage transactions that priced 
in the first half of 2021.65 Additionally, DBRS 
and KBRA were active rating securities backed by 
subprime mortgages and risk transfer securities 
during the first half of 2021. For securities backed 
by subprime mortgages, DBRS rated 32% and 
KBRA rated 28% that priced during the first half 
of 2021;66 for risk transfer securities, DBRS rated 
50% and KBRA rated 14% that priced during the 
first half of 2021.67

Chart 21 shows that the large NRSROs have the 
highest, second highest, and third highest market 
shares in the U.S. CLO segment. However, DBRS 
and KBRA have attained some market share in the 
U.S. CLO segment.

b. Market Share Observations in Other Asset-

Backed Securities Classes

While the large NRSROs maintain a large market 
share in some newer or more esoteric asset-backed 
securities asset classes, DBRS and KBRA have 
gained significant market share in these areas,  
as well.

For instance, 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 the first half of 2021, both rating over 53% 
of the transactions priced during such period.68 
Comparatively, MIS and S&P each rated less  
than 30% of these transactions for the same  
time period.69

Another example of market share gains achieved 
by a medium NRSRO in a discrete asset class 
is KBRA’s rating of securitizations backed by 
aircraft-lease receivables. KBRA rated 85.0% of the 
aircraft-lease receivables transactions that priced 
during the first half of 2021, while MIS and S&P 
rated 63.4% and 29.1%, respectively, of these 
transactions for the same time period.70 KBRA has 
rated sixty-four of the sixty-six, or 97.0%, of the 
aircraft-lease receivables transactions issued from 
December 2015 through the end of the second 
quarter of 2021.71

65	 See Asset-Backed Alert’s ABS database, which indicates that fourteen re-performing mortgage-backed securities 
transactions totaling $8.5 billion priced during the first half of 2021. 

66	 See Asset-Backed Alert’s ABS database, which indicates that forty-two subprime mortgage-backed securities transactions 
totaling $11.6 billion priced during the first half of 2021.

67	 See Asset-Backed Alert’s ABS database, which indicates that twenty-one risk transfer transactions totaling $13.0 billion 
priced during the first half of 2021.

68	 See Asset-Backed Alert’s ABS database, which indicates that thirty unsecured consumer loan transactions totaling  
$10.4 billion priced during the first half of 2021. 

69	 See id.
70	 See Asset-Backed Alert’s ABS database, which indicates that eight aircraft-lease receivables transactions totaling  

$4.1 billion priced during the first half of 2021. 
71	 See id.



	 S TA F F  R E P O R T   |   41

KBRA was also active rating whole-business securi-
tizations during the first half of 2021, rating 45.5% 
of the issuance amount of such transactions.72 
While MIS had a greater market share for this time 
period (rating 65% of the transactions), KBRA’s 
gain in the whole-business category is further 
demonstrated when measured by the number 
of transactions rather than dollar amounts of 
issuance; KBRA rated six of the nine transactions 
priced during the first half of 2021.73

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.74 The effect of these 
requirements can be to increase the demand for and 
liquidity of securities bearing the ratings of specified 
rating agencies. Historically, many of these guide-
lines refer to the ratings from the large NRSROs by 
name (i.e., Fitch, MIS, and S&P). Despite reports 
in recent years that investors are increasingly 
changing their guidelines to allow for investments 
in securities rated by a wider group of NRSROs,75 
investment guidelines continue to be identified as a 
factor impacting the selection of NRSROs to rate 
certain transactions.76 

A related barrier to entry is the inclusion require-
ments 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, and can thus increase the demand for 
securities bearing the ratings of particular

72	 See Asset-Backed Alert’s ABS database, which indicates that nine whole-business securitization transactions totaling $6.1 
billion priced during the first half of 2021. DBRS rated one whole-business securitization transaction representing 7.0% 
of the issuance amount of such transactions priced during the first half of 2021. Fitch rated 5.9% of the issuance amount 
of the whole-business transactions during the same time period.

73	 See id.
74	 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. This barrier to entry was also mentioned during the SEC’s Credit Ratings Roundtable held on May 14, 
2013. At the roundtable, a representative of a former NRSRO mentioned that, according to a study conducted by the 
former NRSRO, approximately 42% of open-end fixed income funds with investment guidelines that reference ratings 
specifically refer to S&P, MIS, or a “major NRSRO.” See Credit Rating Roundtable, May 14, 2013, available at  
https://www.sec.gov/spotlight/credit-ratings-roundtable.shtml. 

75	 See, e.g., Big Investors Accept More Rating Agencies, Asset-Backed Alert, May 19, 2017.
76	 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.

https://democrats-financialservices.house.gov/UploadedFiles/HHRG-117-BA16-Wstate-NadlerJ-20210721.pdf
https://democrats-financialservices.house.gov/UploadedFiles/HHRG-117-BA16-Wstate-NadlerJ-20210721.pdf
https://www.sec.gov/comments/s7-18-11/s71811-88.pdf
https://www.sec.gov/comments/s7-18-11/s71811-88.pdf
https://www.sec.gov/spotlight/credit-ratings-roundtable.shtml


42  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

NRSROs.77 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.78

Market participants and academics have identified 
various other barriers to entry in the credit rating 
industry, including economic and regulatory 
barriers.79 Among the regulatory barriers to entry 
for NRSROs are the potential challenges associated 
with complying with the statutory provisions 
included in the Rating Agency Act, such as the 
requirement in Section 15E(a)(1)(C) to furnish 
written certifications from qualified institutional 
buyers, and the costs associated with the Dodd-
Frank Act and the related rules and rule amend-
ments adopted by the Commission (the NRSRO 
Amendments).80 When the Commission issued

the proposed 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.81 In connection with the adoption of the 
NRSRO Amendments, the Commission acknowl-
edged 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 competi-
tion.82 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.83 

77	 See, e.g., Rating Firms Seek Changes to Index, Asset-Backed Alert, May 26, 2017.
78	 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.

79	 See, e.g., Section IV.C of the March 2012 Annual Report, available at https://www.sec.gov/divisions/marketreg/
ratingagency/nrsroannrep0312.pdf; Fitch Assigns ‘A-’ Rating to S&P’s Senior Unsecured Notes Offering, Outlook Stable, 
Fitch Ratings, Aug. 10, 2020; Fitch Assigns ‘BBB+’ Rating to Moody’s Senior Unsecured Notes Offering, Outlook Stable, 
Fitch Ratings, Aug. 4, 2020.

80	 See 2014 Adopting Release, 79 FR 55078 (Sept. 15, 2014), available at https://www.govinfo.gov/content/pkg/FR-2014-
09-15/pdf/2014-20890.pdf.

81	 See 2014 Adopting Release, 79 FR at 55090, 55154, 55161, and 55254-55. 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.

82	 See 2014 Adopting Release, 79 FR at 55254.
83	 See Section IV.C of the December 2015 Annual Report, available at https://www.sec.gov/ocr/reportspubs/annual-

reports/2015-annual-report-on-nrsros.pdf.

https://www.sec.gov/divisions/marketreg/ratingagency/nrsroannrep0312.pdf
https://www.sec.gov/divisions/marketreg/ratingagency/nrsroannrep0312.pdf
https://www.govinfo.gov/content/pkg/FR-2014-09-15/pdf/2014-20890.pdf
https://www.govinfo.gov/content/pkg/FR-2014-09-15/pdf/2014-20890.pdf
https://www.sec.gov/comments/s7-18-11/s71811.shtml
https://www.sec.gov/ocr/reportspubs/annual-reports/2015-annual-report-on-nrsros.pdf
https://www.sec.gov/ocr/reportspubs/annual-reports/2015-annual-report-on-nrsros.pdf


	 S TA F F  R E P O R T   |   43

Additionally, there are provisions for exemptions 
built into several rules and statutes that relate to 
small and medium NRSROs, if the Commission 
deems that these requirements may impose an 
unreasonable burden on the NRSRO. NRSROs 
may also request exemptions under Section 36 to 
other rules and statutes that do not have exemp-
tions built into them.84 

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.”85 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 method-
ologies, business practices, and credit ratings 
performance. Under Exchange Act rules, NRSROs 
are required to disclose:

	■ Standardized performance statistics;86

	■ Consolidated information about credit rating 
histories;87

	■ Information about material changes and signif-
icant errors in the procedures and methodologies 
used to determine credit ratings;88

	■ Information about specific rating actions;89 and 
	■ Clear definitions of each symbol, number, or 

score in the rating scale used by the NRSRO.90

NRSROs must also disclose certain information in 
connection with each rating action.91 Such infor-
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

84	 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.

85	 See the preamble to the Rating Agency Act. 
86	 See Instructions for Exhibit 1 to Form NRSRO. 
87	 See Rule 17g-7(b). 
88	 See Rule 17g-8(a)(4). 
89	 See Rule 17g-7(a). 
90	 See Rule 17g-8(b)(2).
91	 See Rule 17g-7(a). 

https://www.sec.gov/ocr/ocr-commission-orders.html


44  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

that were relied upon for purposes of determining 
the credit rating, an assessment of the quality of 
information available and considered in deter-
mining the credit rating, and information on the 
sensitivity of the credit ratings to assumptions made 
by the NRSRO.92

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.93 The avail-
ability 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.

NRSROs may also provide transparency to the 
extent they publish commentaries or research. 
NRSROs publish commentaries and research  
that generally include data, analyses, or projec- 
tions on market sectors and economic outlooks.94 
These publications may be helpful to investors 
to understand industry trends and the NRSROs’ 
credit views.

For example, following the emergence of 
COVID-19 in early 2020, NRSROs began 
publishing commentaries and research that provide 
their perspectives on the potential credit and 
rating impacts of COVID-19 on issuers and debt 
obligations in different market sectors. They also 
began publishing COVID-19-related commen-
taries on economic and market trends. KBRA 
published research discussing valuation declines 
in distressed commercial real estate properties in 
CMBS transactions during COVID-19.95 A DBRS 
report examining how the self-storage industry has 
fared during COVID-19 describes how the self-
storage industry had been growing steadily prior 
to COVID-19 and remained resilient as pandemic 
related restrictions persisted, in contrast to certain 
other types of commercial real estate properties, 
including those in the hotel and non-essential  
retail sectors.96

92	 See Rule 17g-7(a)(1)(ii). 
93	 The reports accompanying a rating action are frequently available on a paid subscription basis, although some NRSROs 

provide access to such reports for free.
94	 NRSROs may also make market and economic data separately available.
95	 See KBRA, Appraisals for Distressed CRE Continue to Trend Lower in COVID’s Wake (May 18, 2021), available at  

https://www.kbra.com/documents/report/48884/appraisals-for-distressed-cre-continue-to-trend-lower-in-covid-s-wake.
96	 See DBRS, Self-Storage in the Pandemic: People Need Their Space (Aug. 23, 2021), available at https://www.

dbrsmorningstar.com/research/383322/self-storage-in-the-pandemic-people-need-their-space.

https://www.kbra.com/documents/report/48884/appraisals-for-distressed-cre-continue-to-trend-lower-in
https://www.dbrsmorningstar.com/research/383322/self-storage-in-the-pandemic-people-need-their-space
https://www.dbrsmorningstar.com/research/383322/self-storage-in-the-pandemic-people-need-their-space


	 S TA F F  R E P O R T   |   45

NRSROs have also produced research in recent 
years regarding their views on ESG matters and 
how they incorporate ESG considerations in 
their credit rating actions. For example, DBRS 
published research discussing the potential impact 
of climate change on portfolios of renewable and 
gas-based power plants and how, in some power 
markets, increases in green power generation 
entails risks, such as power supply volatility due to 
more frequent weather-related outages caused by 
climate change.97 KBRA also published research 
regarding how it views the consideration of ESG 
issues in credit analysis and why it does not deploy 
subjective value-based ESG scoring rubrics. KBRA 
indicated that it believes that ESG factors that 
impact credit risk need better disclosure and are 
best examined through the lens of risk management 
analysis for corporate, financial institution, and 
government debt issues and issuers.98

Between 2016 and 2021, several of the Section 
15E Review Areas discussed in Section III above, 
including adherence to policies, procedures, and 
methodologies, conflicts of interest, internal

supervisory controls, DCO activities, and post-
employment activities, included examination 
findings that addressed transparency-related issues. 
In total, there were 172 transparency-related 
findings, accounting for approximately 39% of all 
essential findings, in the Section 15E examinations 
conducted from 2016 to 2021. On average, each 
Section 15E examination cycle from 2016 to 2021 
included 29 transparency-related essential findings. 
For the 2020 and 2021 examinations specifically, 
transparency-related essential findings accounted 
for 16 and 18 essential findings, respectively.

C. CONFLICTS OF INTEREST
NRSROs operate under one or more business 
models, each having potential conflicts of interest. 
Most of the NRSROs primarily operate under the 
“issuer-pay” model, which is subject to a potential 
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 “subscriber-pay” model, under  
which investors pay a subscription fee to access 

97	 See DBRS, Impact of Climate Change on Renewable and Natural Gas-Fired Power Generation Assets (Oct. 4, 2021), 
available at https://www.dbrsmorningstar.com/research/385386/impact-of-climate-change-on-renewable-and-natural-gas-
fired-power-generation-assets. 

98	 See KBRA, Credit Ratings Deserve ESG Risk Analysis, Not ESG Scores (Feb. 3, 2021), available at https://www.kbra.
com/documents/report/44260/credit-ratings-deserve-esg-risk-analysis-not-esg-scores. 

https://www.dbrsmorningstar.com/research/385386/impact-of-climate-change-on-renewable-and-natural-ga
https://www.dbrsmorningstar.com/research/385386/impact-of-climate-change-on-renewable-and-natural-ga
https://www.kbra.com/documents/report/44260/credit-ratings-deserve-esg-risk-analysis-not-esg-scores
https://www.kbra.com/documents/report/44260/credit-ratings-deserve-esg-risk-analysis-not-esg-scores


46  |   O F F I C E  O F  C R E D I T  R AT I N G S 	

an NRSRO’s ratings. This model is also subject 
to potential 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 invests in newly issued bonds and  
would obtain higher yields if the bonds were to 
have lower ratings.

Section 15E and the related Commission rules 
address conflicts of interest.99 For example, Rule 
17g-5 identifies certain conflicts of interest that are 
prohibited under all circumstances100 and other 
conflicts of interest that are prohibited unless an 
NRSRO has publicly disclosed the existence of the 
conflict and has implemented policies and proce-
dures reasonably designed to address and manage 
such conflict.101

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 for a person where an 
employee of the NRSRO that participated in deter-
mining, 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.102

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 consider-
ations.103 In May 2020, the Commission instituted 
settled administrative proceedings against MCR for 
issuing or maintaining credit ratings where MCR 
employees who participated in determining or 
monitoring the credit ratings also participated in the 
sales or marketing of a product or service of MCR, 
in violation of Rule 17g-5(c)(8)(i).104

Other statutory provisions and Commission rules 
address potential 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.105 Rule 17g-8(c) requires 
an NRSRO’s policies and procedures to address 
instances in which a “look-back” review deter-
mined that a conflict of interest influenced a credit

99	 See, e.g., Section 15E(h) and Rule 17g-5. 
100	 See Rule 17g-5(c).
101	 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.

102	 See Rule 17g-5(c)(2) and Rule 17g-5(c)(4).
103	 See Rule 17g-5(c)(8).
104	 See In re Morningstar Credit Ratings, LLC, Exch. Act Rel. No. 88880 (May 15, 2020) (settled action), available at  

https://www.sec.gov/litigation/admin/2020/34-88880.pdf. 
105	 See Section 15E(h)(4)(A).

https://www.sec.gov/litigation/admin/2020/34-88880.pdf


	 S TA F F  R E P O R T   |   47

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.106

One of the conflict of interest rules concerns the 
issuer-pay conflict of interest relating to struc-
tured finance products. The Commission adopted 
Rule 17g-5(a)(3) in 2009 to address this conflict 
of interest. An exemption was in effect for Rule 
17g-5(a)(3) with regard to structured finance 
products issued by non-U.S. issuers in transactions 
outside the United States until the Commission 
codified the exemption in August 2019. In the 
adopting release, the Commission directed the 
Staff to further evaluate the effectiveness of Rule 
17g-5(a)(3) with respect to ratings of structured 
finance products that are not eligible for relief 
under the adopted exemption.107 Towards this end, 
in a February 2020 speech, then OCR Director

Jessica Kane welcomed input and engagement 
from all interested parties on the effectiveness of 
Rule 17g-5(a)(3).108 In the May 26, 2021 hearing 
before the House Appropriations Subcommittee 
on Financial Services and General Government, 
SEC Chair Gary Gensler testified that he has asked 
the Staff to take a fresh look at the Staff’s prior 
work on the issuer-pay conflict to assess if there are 
further modifications to be done.109

As discussed in Section III.C.5 of this Report, 
conflicts of interest accounted for 11.5% of all 
essential findings from the Section 15E examina-
tions conducted from 2016 to 2021. As Chart 3 
shows, conflicts of interest accounted for 19 of the 
essential findings from the 2016 to 2021 exami-
nations.110 Conflicts of interest have accounted for 
approximately seven essential findings for each 
examination, on average, from 2017 to 2021. 
For the 2020 and 2021 examinations, conflicts 
of interest accounted for five and four essential 
findings, respectively.

106	 See Rule 17g-8(c). 
107	 See Amendments to Rules for Nationally Recognized Statistical Rating Organizations, Release No. 34-86590 (Aug. 7, 

2019), 84 FR 40247, 40250 (Aug. 14, 2019) (“2019 Adopting Release”), available at https://www.govinfo.gov/content/
pkg/FR-2019-08-14/pdf/2019-17218.pdf.

108	 See Jessica Kane, Speech, The SEC’s Office of Credit Ratings and NRSRO Regulation: Past, Present, and Future  
(Feb. 24, 2020), available at https://www.sec.gov/news/speech/speech-jessica-kane-2020-02-24. OCR then-Director 
Jessica Kane delivered a speech describing the NRSRO regulatory framework and certain regulatory requirements;  
OCR’s responsibility for administering this regulatory framework; and observed trends in NRSRO compliance. The 
speech referenced the Commission’s 2019 Adopting Release and invited interested parties to provide input on the 
effectiveness of Rule 17g-5(a)(3). 

109	 See Securities and Exchange Commission Oversight Hearing Before the Subcommittee on Financial Services and  
General Government of the House Committee on Appropriations, 117th Congress (May 26, 2021), available at  
https://appropriations.house.gov/events/hearings/securities-and-exchange-commission-oversight-hearing.

110	 This was likely related to the new and amended rules that became effective in 2015. See note 21.

https://www.govinfo.gov/content/pkg/FR-2019-08-14/pdf/2019-17218.pdf
https://www.govinfo.gov/content/pkg/FR-2019-08-14/pdf/2019-17218.pdf
https://www.sec.gov/news/speech/speech-jessica-kane-2020-02-24
https://appropriations.house.gov/events/hearings/securities-and-exchange-commission-oversight-hearing


48  |   O F F I C E  O F  C R E D I T  R AT I N G S 	



	 S TA F F  R E P O R T   |   49

V. ACTIVITIES  
RELATING TO NRSROs

A. COMMISSION ORDERS  
AND RELEASES

T
he Commission issued the following orders 
and releases relating to NRSROs or credit 
ratings in general during the Report Period:

	■ In re DBRS, Inc., Exch. Act Rel. No. 92952 
(Sept. 13, 2021) (settled action).111 The 
Commission instituted settled administrative 
proceedings against DBRS concerning violations 
of Rule 17g-8(b)(1) in connection with rating 
CLO Combo Notes.112 The SEC’s order finds 
that DBRS’s policies and procedures were not 
reasonably designed to ensure that it rated CLO 
Combo Notes in accordance with the terms of 
those securities.

	■ Continuance of Exemption Pursuant to Order 
Granting Temporary Conditional Exemption 
for Japan Credit Rating Agency, Ltd. from 
Certain Requirements of Section 15E(t) of 
the Securities Exchange Act of 1934.113 On 
August 17, 2018, the Commission granted 
JCR a temporary, conditional exemption from 
certain corporate governance requirements 
under Section 15E(t). On August 20, 2021, the 
exemption automatically renewed until August 
20, 2023.114 

	■ SEC v. Morningstar Credit Ratings, LLC, No. 
1:21-cv-1359 (S.D.N.Y. filed Feb. 16, 2021).115 
The Commission filed a civil action alleging that 
former credit rating agency Morningstar Credit 
Ratings, LLC, violated disclosure and internal 
controls provisions of Section 15E and the rules 
promulgated thereunder in rating CMBS.116

111	 Available at https://www.sec.gov/litigation/admin/2021/34-92952.pdf. 
112	 See https://www.sec.gov/enforce/34-92952-s.
113	 Release No. 34-83884 (Aug. 17, 2018), available at https://www.sec.gov/rules/exorders/2018/34-83884.pdf. 
114	 See id.
115	 Available at https://www.sec.gov/litigation/complaints/2021/comp-pr2021-29.pdf.
116	 See https://www.sec.gov/news/press-release/2021-29.

https://www.sec.gov/litigation/admin/2021/34-92952.pdf
https://www.sec.gov/enforce/34-92952-s
https://www.sec.gov/rules/exorders/2018/34-83884.pdf
https://www.sec.gov/litigation/complaints/2021/comp-pr2021-29.pdf
https://www.sec.gov/news/press-release/2021-29


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B. STAFF PUBLICATIONS
The Staff issued the following publications relating 
to NRSROs or credit ratings in general during the 
Report Period:

	■ 2020 Summary Report of Commission Staff’s 
Examinations of Each Nationally Recognized 
Statistical Rating Organization, dated December 
2020 (December 2020 Exam Report), as 
required under Section 15E(p)(3)(C).117 The 
December 2020 Exam Report summarizes  
the essential findings of the examinations 
conducted by the Staff under Section 15E(p)
(3)(C) for the period January 1, 2019 through 
December 31, 2019.

	■ Annual Report on Nationally Recognized 
Statistical Rating Organizations, dated 
December 2020 (December 2020 Annual 
Report), as required by Section 6 of the Rating 
Agency Act.118 The December 2020 Annual 
Report addresses the matters described in the 
second paragraph under Section II of this Report 
for the period June 26, 2019 to June 25, 2020. 

C. ADVISORY COMMITTEES
The SEC’s Investor Advisory Committee (IAC)119 
has considered the SEC’s approach to regulation of 
the credit rating agency industry. The IAC met five 
times during the Report Period. At the IAC meeting 
on March 11, 2021,120 the IAC approved, for the 
Commission’s consideration, the Market Structure 
Subcommittee’s recommendation for increasing 
transparency in OCR Staff’s annual examination 
reports of NRSROs.121

117	 Available at https://www.sec.gov/files/nrsro-summary-report-2020.pdf. 
118	 Available at https://www.sec.gov/files/2020-annual-report-on-nrsros.pdf. 
119	 Section 911 of the Dodd-Frank Act established the IAC to advise the Commission on regulatory priorities, the regulation 

of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect 
investor interests and to promote investor confidence and the integrity of the securities marketplace. The Dodd-Frank 
Act authorizes the IAC to submit findings and recommendations for review and consideration by the Commission. 
See https://www.sec.gov/spotlight/investor-advisory-committee.shtml; https://www.sec.gov/spotlight/investor-advisory-
committee-2012/iac-charter.pdf.

120	 See Webcast of IAC Meeting, SEC (Mar. 11, 2021), available at https://www.sec.gov/video/webcast-archive-player.
shtml?document_id=iac031121. The IAC’s Market Structure Subcommittee circulated its draft recommendation 
ahead of this IAC meeting. See https://www.sec.gov/spotlight/investor-advisory-committee-2012/credit-rating-agencies-
recommendation-03112021.pdf. 

121	 See Recommendation of the Market Structure Subcommittee of the SEC Investor Advisory Committee Regarding Credit 
Rating Agencies (Mar. 11, 2021), available at https://www.sec.gov/spotlight/investor-advisory-committee-2012/20210311-
credit-rating-agencies-recommendation.pdf.

https://www.sec.gov/files/nrsro-summary-report-2020.pdf
https://www.sec.gov/files/2020-annual-report-on-nrsros.pdf
https://www.sec.gov/spotlight/investor-advisory-committee.shtml
https://www.sec.gov/spotlight/investor-advisory-committee-2012/iac-charter.pdf
https://www.sec.gov/spotlight/investor-advisory-committee-2012/iac-charter.pdf
https://www.sec.gov/video/webcast-archive-player.shtml?document_id=iac031121
https://www.sec.gov/video/webcast-archive-player.shtml?document_id=iac031121
https://www.sec.gov/spotlight/investor-advisory-committee-2012/credit-rating-agencies-recommendation-03112021.pdf
https://www.sec.gov/spotlight/investor-advisory-committee-2012/credit-rating-agencies-recommendation-03112021.pdf
https://www.sec.gov/spotlight/investor-advisory-committee-2012/20210311-credit-rating-agencies-recommendation.pdf
https://www.sec.gov/spotlight/investor-advisory-committee-2012/20210311-credit-rating-agencies-recommendation.pdf


	 S TA F F  R E P O R T   |   51

VI. APPENDIX:  
SUMMARY OF STATUTORY 
FRAMEWORK AND RULES

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 Act122 and amended by the 
Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act).123

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.124 

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,125 promptly 
update its filing in certain circumstances,126 and 
make its current Form NRSRO filing and most 
of its current Form NRSRO Exhibits available 
on its public website.127 

	■ Disclose certain information, including 
information concerning the NRSRO’s 
performance measurement statistics and  
its procedures and methodologies to  
determine ratings.128

	■ 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,129 and retain records of its internal 
control structure.130

	■ Consider certain factors with respect to its 
establishment, maintenance, enforcement,  
and documentation of an effective internal 
control structure.131

122	 Pub. L. No. 109-291, 120 Stat. 1327 (2006).
123	 Pub. L. No. 111-203, § 932, 124 Stat. 1376, 1872-83 (2010).
124	 See Section 15E(p)(2) for a description of OCR staffing requirements.
125	 Section 15E(b)(2) and Rule 17g-1(f).
126	 Section 15E(b)(1) and Rule 17g-1(e).
127	 Section 15E(a)(3) and Rule 17g-1(i).
128	 Section 15E(a)(1)(B)(i) and Section 15E(a)(1)(B)(ii).
129	 Section 15E(c)(3)(A). 
130	 Rule 17g-2(b)(12).
131	 See, e.g., Rule 17g-8(d)(1)–(4). 



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	■ 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.132 

	■ 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.133 
The report must be accompanied by a signed 
statement by the NRSRO’s chief executive officer 
or an individual performing similar functions.134

	■ 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,135 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.136 

	■ Publish an information disclosure form when 
taking a rating action with respect to a rating 
assigned to an obligor, security, or money-market 
instrument in a class for which it is registered 
as an NRSRO.137 The information form must 
disclose certain information with respect to 
the particular rating action.138 In addition, 
the NRSRO must attach to the information 
disclosure form a signed statement by a person 
within the NRSRO with responsibility for the 
rating action.139

132	 See, e.g., Rule 17g-8(a)(2)–(5). 
133	 Rule 17g-3(a)(7)(i).
134	 Rule 17g-3(b)(2).
135	 Rule 17g-8(b)(1).
136	 Rule 17g-8(b)(3).
137	 Rule 17g-7(a). Rule 17g-7(a) defines rating action to include an expected or preliminary rating, an initial rating, an 

upgrade or downgrade of an existing rating (including a downgrade to, or assignment of, default), and an affirmation 
or withdrawal of an existing rating if the affirmation or withdrawal is the result of the NRSRO’s review of the rating 
using applicable procedures and methodologies for determining credit ratings. Pursuant to Rule 17g-7(a)(3), an NRSRO 
is exempt from publishing an information disclosure form for a particular rating if: (i) the rated obligor or issuer of the 
rated security or money market instrument is not a U.S. person; and (ii) the NRSRO has a reasonable basis to conclude 
that: (A) with respect to any security or money market instrument issued by a rated obligor, all offers and sales by any 
issuer, sponsor, or underwriter linked to the security or money market instrument will occur outside the United States; or 
(B) with respect to a rated security or money market instrument, all offers and sales by any issuer, sponsor, or underwriter 
linked to a security or money market instrument will occur outside the United States.

138	 Rule 17g-7(a)(1)(ii)(A)-(N) specifies the information that must be disclosed in the information disclosure form. These 
required disclosures include: the version of the procedure or methodology used to determine the credit rating; disclosures 
concerning the uncertainty of the rating, including regarding the reliability, accuracy, quality, and accessibility of data 
related to the rating; a statement containing an overall assessment of the quality of information available and considered 
in determining the credit rating for the obligor, security, or money market instrument; and information on the sensitivity of 
the rating to assumptions made by the NRSRO. In addition, an NRSRO must attach to the information disclosure form 
any executed Form ABS Due Diligence-15E containing information about the security or money market instrument subject 
to the rating action that is received by the NRSRO or obtained by the NRSRO through a Rule 17g-5(a)(3) website. 

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



	 S TA F F  R E P O R T   |   53

	■ Make and retain, or retain, certain records, 
including a record documenting its established 
procedures and methodologies used to 
determine credit ratings140 and records related 
to its ratings.141 An NRSRO must promptly 
furnish to the Commission or its representatives 
copies of required records, including English 
translations of those records, upon request.142

	■ Establish, maintain, and enforce written policies 
and procedures reasonably designed to prevent 
the misuse of material non-public information 
(MNPI), including the inappropriate dissemi-
nation 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.143

	■ Establish, maintain, and enforce written  
policies and procedures reasonably designed 
to address and manage conflicts of interest.144 
Certain conflicts of interest are expressly 
prohibited,145 and for other types of conflicts of 
interest, the NRSRO must disclose the conflicts 
and have policies and procedures in place to 
manage them.146

	■ Refrain from engaging in specified unfair, 
coercive, or abusive practices.147

	■ 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.148 

	■ 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.149 

140	 Rule 17g-2(a)(6).
141	 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).

142	 Section 15E(a) and (b) and Rule 17g-2(f).
143	 Section 15E(g) and Rule 17g-4.
144	 Section 15E(h) and Rule 17g-5. See also Section IV.C of this Report.
145	 Rule 17g-5(c). See also Section IV.C of this Report.
146	 Rule 17g-5(a)(1) and (a)(2); Rule 17g-5(b). Moreover, Rule 17g-5(a)(3) prohibits an NRSRO from having a conflict 

of interest related to a rating for a security or money market instrument issued by an asset pool or as part of any ABS 
transaction unless the NRSRO, among other things, maintains and provides access to a password-protected Internet 
Web site containing a list of each such security or money market instrument for which it is currently in the process of 
determining an initial credit rating, and obtains certain written representations from the issuer, sponsor, or underwriter  
of each such security or money market instrument. 

147	 Rule 17g-6.
148	 Section 15E(a)(1)(B)(v).
149	 Section 15E(j)(3).



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	■ 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.150 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.151

	■ Have a board of directors or similar governing 
body (collectively, the Board), certain of 
whose members must be independent from 
the NRSRO.152 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.153

	■ 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.154 

	■ Establish policies and procedures regarding 
post-employment activities of certain  
former personnel.155 

150	 Section 15E(j)(1) and (3).
151	 Section 15E(j)(5).
152	 Section 15E(t)(2).
153	 Section 15E(t)(3) and Rule 17g-8(a)(1).
154	 Rule 17g-9.
155	 Section 15E(h)(4) and (5); Rule 17g-8(c).



	 S TA F F  R E P O R T   |   55



Washington, DC