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that such rating was an independent evaluation of the risks and merits of the instrument. ‘‘(r) CREDIT RATINGS METHODOLOGIES.—The Commission shall Regulations. prescribe rules, for the protection of investors and in the public interest, with respect to the procedures and methodologies, including qualitative and quantitative data and models, used by nationally recognized statistical rating organizations that require each nationally recognized statistical rating organization— ‘‘(1) to ensure that credit ratings are determined using procedures and methodologies, including qualitative and quan- titative data and models, that are— ‘‘(A) approved by the board of the nationally recognized statistical rating organization, a body performing a function similar to that of a board; and ‘‘(B) in accordance with the policies and procedures of the nationally recognized statistical rating organization for the development and modification of credit rating proce- dures and methodologies; ‘‘(2) to ensure that when material changes to credit rating procedures and methodologies (including changes to qualitative and quantitative data and models) are made, that— ‘‘(A) the changes are applied consistently to all credit ratings to which the changed procedures and methodologies apply; ‘‘(B) to the extent that changes are made to credit rating surveillance procedures and methodologies, the changes are applied to then-current credit ratings by the nationally recognized statistical rating organization within a reasonable time period determined by the Commission, by rule; and ‘‘(C) the nationally recognized statistical rating organization publicly discloses the reason for the change; and ‘‘(3) to notify users of credit ratings— Notification. ‘‘(A) of the version of a procedure or methodology, including the qualitative methodology or quantitative inputs, used with respect to a particular credit rating; ‘‘(B) when a material change is made to a procedure or methodology, including to a qualitative model or quan- titative inputs; ‘‘(C) when a significant error is identified in a proce- dure or methodology, including a qualitative or quantitative model, that may result in credit rating actions; and ‘‘(D) of the likelihood of a material change described in subparagraph (B) resulting in a change in current credit ratings. ‘‘(s) TRANSPARENCY OF CREDIT RATING METHODOLOGIES AND INFORMATION REVIEWED.— ‘‘(1) FORM FOR DISCLOSURES.—The Commission shall Regulations. require, by rule, each nationally recognized statistical rating organization to prescribe a form to accompany the publication of each credit rating that discloses— ‘‘(A) information relating to— ‘‘(i) the assumptions underlying the credit rating LAWS procedures and methodologies; ‘‘(ii) the data that was relied on to determine the credit rating; andPUBLIC with on anorris VerDate Nov 24 2008 03:41 Aug 28, 2010 Jkt 089139 PO 00203 Frm 00505 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL203.111 GPO1 PsN: PUBL203