Of course, the credit rating industry was never going to be a commodity business with hundreds of small-scale producers. The market for bond information is one where potential barriers to entry like economies of scale, the advantages of experience, and brand name reputation are important features. Nevertheless, in creating the NRSRO designation, the Securities and Exchange Commission had become a signififi cant barrier to entry into the bond rating business in its own right. Without the benefifi t of the NRSRO designation, any would-be bond rater would likely remain small-scale. New rating fifi rms would risk being ignored by most fifi nancial institutions (the “buy side” of the.
