Securities and Exchange Commission
Fixed Income Market Structure Advisory Committee
Attention: Michael Heaney, Committee Chairman
100 F Street, NE
Washington, DC 20549-1090

Re: Securities and Exchange Commission Fixed Income Market Structure Advisory Committee (File No. 265-30)

Dear Mr. Heaney:

The undersigned trade associations appreciate the opportunity to provide feedback on the discussion by the Fixed Income Market Structure Advisory Committee (FIMSAC) around examining issues concerning credit rating agencies (CRAs), specifically assessing potential alternatives to the CRA business model. In response to the discussion document circulated in advance of FIMSAC’s February 10th meeting, we would like to provide our views on potential ramifications of some of the alternative models under discussion, particularly around the assignment model.1 While we think there are potential ideas worth exploring for FIMSAC to improve the fixed income markets, particularly for the investor community, we are concerned that proposals aimed to mitigate potential conflicts of interest surrounding the “issuer-pays” model by introducing a new alternative compensation model could potentially yield lower quality credit ratings and reduce information available to investors–creating new conflicts that do not currently exist.

The U.S. capital markets are the largest and most robust in the world, and credit ratings help provide efficiency in the debt markets for our member companies seeking to raise capital for their business operations as well as investors that are seeking comparability and transparency in information on products when making their investment decisions. Our associations represent member companies that are on both issuers and investors. A healthy and functioning credit ratings market allows for market efficiency for the deployment of capital for companies as well as insight and predictability for investors and other market participants. Any proposal that fundamentally alters the current market and process for issuance of credit ratings should be heavily scrutinized to shield from unintended negative consequences resulting in potential disruptions to global financial markets.