The SEC seeks public comments on how best to assign credit ratings for structured finance products.  This study on the feasibility of a system in which a public or private utility or an SRO would assign a nationally recognized statistical rating organization (NRSRO) to make such credit rating determinations is mandated by the Dodd-Frank Reform Act. 

The public comment period will remain open until September 2011, or for the next 4 months.  Interested persons are asked to provide:  (i) comments, (ii) proposals, (iii) data, and (iv) analysis in response to questions presented in the request.   The SEC then has until 7/21/2012 to submit its findings and recommendations (for regulatory or statutory changes to Congress.

The SEC needs to address these issues: 

• the credit rating process for structured finance products;
• conflicts associated with the "issuer-pay" and the "subscriber-pay" models;
• the feasibility of establishing a system for assigning NRSROs the task of determining credit ratings for structured finance products - it's suggested that assignments are made either by a public or private utility, or a self-regulatory organization (SRO);
• the range of metrics that could be used to determine the accuracy of credit ratings for structured finance products;  and,
• alternative means for compensating NRSROs that would create incentives for accurate credit ratings for structured finance products.  

For further details, go to:   [SEC Release 11-108, 5/10/11]