The U.S. Securities & Exchange Commission has voted to propose new rules for credit rating agencies.

The SEC voted to propose rules to implement provisions of the Credit Rating Agency Reform Act of 2006, which was enacted on Sept. 29, 2006. The legislation defines the term “nationally recognized statistical rating organization (NRSRO)”. It also provides the authority for the commission to implement registration, recordkeeping, financial reporting, and oversight rules designed to ensure that NRSROs conduct their activities with integrity and impartiality.

Among the proposed rules, the SEC would require a credit rating agency to apply to the commission for registration as an NRSRO; it would impose record-keeping requirements; it would require an NRSRO to have procedures designed to prevent potential misuses of material nonpublic information; it would require an NRSRO to disclose and manage the conflicts of interest that arise in the business of issuing credit ratings; and, it would prohibit them from engaging in certain acts or practices relating to the issuance of credit ratings that the commission has determined to be unfair, coercive, or abusive.

The legislation directs the commission to issue final rules no later than 270 days after its enactment (or by June 26).