1 SEC Release No. 34-39457 (Dec. 17, 1997). The release notes that the NRSRO concept has expanded beyond its
originally intended use under the net capital rule.
2 SEC Release No. 34-39455 (Dec. 17, 1997) (proposed rule amendments); SEC Release No. 34-39456 (Dec. 17, 1997)
(concept release). Copies of these releases are not attached; they are available from the SECs home page at
www.sec.gov.
[9542]
December 23, 1997
TO: MONEY MARKET FUNDS ADVISORY COMMITTEE No. 8-97
SEC RULES COMMITTEE No. 119-97
RE: SEC PROPOSES TO DEFINE NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATION
______________________________________________________________________________
The Securities and Exchange Commission recently proposed amendments to its broker-
dealer net capital rule (Rule 15c3-1) under the Securities Exchange Act of 1934 which would
define the term "Nationally Recognized Statistical Rating Organization" for the purposes of that
rule.1 A copy of the NRSRO proposal is attached.
The proposed definition sets forth a list of attributes to be considered by the SEC in
designating rating organizations as NRSROs and the process for applying for NRSRO
designation. Currently, a rating organization must receive a no-action letter from the SEC
Division of Market Regulation to be designated an NRSRO. The SECs release states that an
NRSRO designation would apply only to a rating organization’s opinion concerning the
creditworthiness of debt instruments. Other opinions and views of the rating organization
would be outside the scope of the NRSRO designation.
The NRSRO proposal was released at the same time as certain other proposed
amendments and a concept release related to Rule 15c3-1.2 The other proposed amendments
would alter the charges, or "haircuts," from net worth in computing net capital for certain
interest rate instruments. The concept release poses a number of questions on the extent to
which statistical models should be used in setting capital requirements for a broker-dealers
proprietary positions, and solicits views on other possible alternatives for establishing net
capital requirements.
Comments on the NRSRO proposal are due to the SEC 60 days following the date of
publication in the Federal Register. Comments on the other Rule 15c3-1 proposed
amendments and concept release are due to the SEC 90 days following the date of
publication in the Federal Register. Currently, the Institute intends to comment on the
NRSRO proposal but not to comment on the other Rule 15c3-1 proposed amendments or the
concept release. Please provide any comments you have on the NRSRO proposal to me by
Friday, January 23, 1998. I can be reached at (202) 326-5819, by e-mail at savage@ici.org, or by
fax at (202) 326-5827.
Joseph P. Savage
Assistant Counsel
Attachment (in .pdf format)