FINANCIAL SERVICES AGENCY
GOVERNMENT OF JAPAN

3-1-1 Kasumigaseki Chiyoda-ku Tokyo 100-8967 Japan

July 25, 2003

Mr. Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: Rating Agencies and the Use of Credit Ratings under the Federal Securities Laws (File No. S7-12-03)

Dear Mr. Katz: As the Director for International Financial Markets of the Financial Services Agency of Japan ("FSA"), I am pleased to submit this letter on behalf of the FSA in response to the request of the Securities and Exchange Commission ("SEC") for comments on the Concept Release on Rating Agencies and the Use of Credit Ratings under the Federal Securities Laws ("Concept Release") in Release Nos. 33-8236, 34-47972, and IC-26066.

We recognize that some Japanese credit rating agencies ("CRAs") have already indicated to the SEC their intention to be recognized as the NRSRO mainly because the marketplace views the NRSRO designation as the equivalent of the "Good Housekeeping Seal of Approval," as mentioned in the SEC's Report on the Role and Function of the Credit Rating Agencies in the Operation of the Securities Markets, published on January 24, 2003. We appreciate that the SEC invited one Japanese CRA to the hearings held last November. With the increasing globalization of capital markets, foreign CRAs would be important candidates for new entrants to the credit rating business in the United States. Such new entrants could contribute to the maintenance and promotion of competition in the credit rating business.

In this context, we note that the U.S. Department of Justice, commenting on the Commission's 1997 rule proposal, opposed the use of the "national recognition" requirement because, in its view, that criterion likely creates a "nearly insurmountable barrier to new entry into the market for NRSRO services," and recommended the Commission consider "provisional" NRSRO status for foreign CRAs.

From such viewpoint, we would like to make affirmative responses to the following questions contained in the Concept Release. (Response to Question 20) A rating agency that confines its activity to a limited or largely non-U.S. geographic area should be considered for NRSRO recognition. (Response to Question 21) The SEC may consider a provisional NRSRO status for rating agencies that comply with NRSRO recognition criteria but lack national recognition.

Yours Sincerely,

Naohiko Matsuo
Director for International Financial Markets
Financial Services Agency
Government of Japan