ABSTRACT
During a commission meeting dealing with the adoption of amendments to rule 2a-7 under the Investment Company Act, the author expressed concern with the commission's increased reliance on the judgment of so-called nationally recognized statistical rating organizations (NRSROs). The Multijurisdictional Disclosure (MJDS) rules hinge more favorable regulatory treatment on the issuance of a high rating by an NRSRO. As a result, the two Canadian rating agencies, Canadian Bond Rating Service (CBRS) and Dominion Bond Rating Service Limited (DBRS), were prompted to seek designation by the commission as NRSROs. The globalization and securitization of international financial markets have expanded the role of credit ratings in countries other than United States. Credit ratings currently are incorporated into regulatory schemes in, among other countries, Australia, Canada, France, Japan, the United Kingdom, Mexico, and Switzerland, and in the Eurobond market. Nevertheless, credit ratings have not yet obtained the degree of importance in domestic markets of other countries as they have in United States.
