A Nationally Recognized Statistical Rating Organization (NRSRO) is a credit rating agency (CRA) that issues credit ratings that the U.S. Securities and Exchange Commission (SEC) permits other financial firms to use for certain regulatory purposes. Originally, seven rating agencies were recognized as NRSROs, a number that dwindled as a result of mergers to six by the mid-1990s and then to three by 2003. As of November 2011, nine organizations were designated as NRSROs.
Ratings by NRSROs are used for a variety of regulatory purposes in the United States. In addition to net capital requirements (described in more detail below), the SEC permits certain bond issuers to use a shorter prospectus form when issuing bonds if the issuer is older, has issued bonds before, and has a credit rating above a certain level. SEC regulations also require that money market funds (mutual funds that mimic the safety and liquidity of a bank savings deposit, but without Federal Deposit Insurance Corporation insurance) comprise only securities with a very high rating from an NRSRO. Likewise, insurance regulators use credit ratings from NRSROs to ascertain the strength of the reserves held by insurance companies.
Read more about Nationally Recognized Statistical Rating Organization: History, Controversies, Subprime Mortgages, CDOs, and The Financial Crisis, List of NRSROs
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“It used to be said that, socially speaking, Philadelphia asked who a person is, New York how much is he worth, and Boston what does he know. Nationally it has now become generally recognized that Boston Society has long cared even more than Philadelphia about the first point and has refined the asking of who a person is to the point of demanding to know who he was. Philadelphia asks about a man’s parents; Boston wants to know about his grandparents.”
—Cleveland Amory (b. 1917)
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—Johann Wolfgang Von Goethe (1749–1832)
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—Clara Barton (1821–1912)