Nationally Recognized Statistical Ratings Organization (NRSRO)

Nationally Recognized Statistical Ratings Organization (NRSRO),

Definition of Nationally Recognized Statistical Ratings Organization (NRSRO):

  1. Generally, to be considered a nationally recognized statistical ratings organization (NRSRO), the SEC must deem the agency to be "nationally recognized" in the U.S., and it must provide reliable and credible credit ratings. Also taken into consideration by the SEC are things like the size of the credit rating agency, operational capability, and the agency's financial resources. The credit ratings provided by NRSROs are used by the U.S. government in several regulatory areas and are also used as benchmarks by federal and state agencies. Investors also refer to ratings by NRSROs. Some examples of current nationally recognized statistical rating organizations include Moody's Investors Service Inc., S&P Global Ratings, Fitch Ratings Inc., and Morningstar Credit Ratings, LLC.

  2. A nationally recognized statistical ratings organization (NRSRO) is a credit rating organization that provides an assessment of the creditworthiness of a firm or financial instrument(s) and is registered with the Securities and Exchange Commission (SEC). Not all credit rating organizations are NRSROs. As of May 2018, there are ten NRSROs registered with the SEC. The SEC Office of Credit Ratings administers its rules relating to NRSROs.

  3. An organization that allocates credits ratings to companies using strict credit rating process to ensure good quality rating. The credit ratings are used by investors to assess the investment suitability of companies; it also acts as benchmark for government agencies. There are five officially recognized NRSRO: Fitch, A.M. best, Standard and Poors, Dominion Bond Rating service and Moody Investors Services Inc.

Meaning of Nationally Recognized Statistical Ratings Organization (NRSRO) & Nationally Recognized Statistical Ratings Organization (NRSRO) Definition