July 28, 2003

Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
e-mail: rule-comments@sec.gov

Re: File No. 57-12-03

Ladies and Gentlemen:

We are very pleased to have this opportunity to respond to the SEC's request contained in the release entitled "Rating Agencies and the Use of Credit Ratings Under the Federal Securities Laws."

Northern Trust Corporation ("Northern") is a publicly registered and traded multi-bank holding company with its headquarters in Chicago, Illinois. Northern also has issued publicly registered debt securities on numerous occasions, as a regular part of its corporate finance activities. We have a network of offices in 14 U.S. states and international offices in six countries and over 8,200 employees worldwide. Northern had assets totaling $39 billion and trust assets under administration totaling $1.8 trillion as of June 30, 2003.

We are delighted to have this opportunity to comment on these matters. We are strong supporters of uniform standards on the matters discussed herein, and we welcome the opportunity to discuss any comments in this letter should you wish to do so.

While we regard many of the questions raised in the release important and worthy of comment, we will confine our response to answering questions 47 and 48 in the section "Alleged Anticompetitive, Abusive and Unfair Practices," which questions touch on matters that particularly concern us.

Question 47: Should NRSRO recognition specifically be conditioned on an NRSRO's agreeing to forbear from requiring issuers to purchase ancillary services as a precondition for performance of the ratings service?

Question 48: Should NRSRO recognition specifically be conditioned on an NRSRO's not engaging in specified practices with respect to unsolicited rating, (e.g., sending a fee schedule and "encouraging" payment, indicating a rating might be improved with the cooperation of the issuer)?

In general, Northern has experienced past issues with rating agencies in at least two respects. First, Northern has been required to purchase ratings that it has not requested and has no intention to request, in order to receive ratings that Northern does desire to receive. Secondly, Northern has been sent bills by rating agencies for ratings that were not requested by Northern, and for which Northern had not previously agreed to pay. On occasion, we have paid such invoices in order to preserve goodwill with the rating agency, but we feel that this practice, along with the one described above, is prone to abuse.

In the case of the first practice mentioned above, that of the "linked" service, the security issuer has no meaningful choice but to "hire" the rating agency to perform a service that the issuer does not need, in order to receive what is an essential service, the rating of a particular securities issue or other service. In the second case, that of the invoice submitted for work not requested, the issuer may refuse to pay, but is subjected to a reasonable concern that failure to pay will perhaps affect future ratings by the rating agency, or may affect the attitude of the rating agency to the issuer more generally.

Both problems can be effectively dealt with by a requirement that all services for which a rating agency may receive compensation must be the subject of a written agreement for services previously entered into not more often than annually or even biannually between issuer and rating agency. This agreement should not be occasioned by the rating of any particular issue or service of the issuer. Compensation may be calculated either on a per service basis or on a flat fee, but in any case any invoice or other request for payment by the rating agency should be the result of a prior written agreement between the parties covering all material terms of the relationship. Of course, any communication that states or implies any connection between the terms of compensation of the rating agency and the ratings actually received by an issuer must be explicitly prohibited.

We feel that if implemented, these straightforward policies would help restore investor confidence in the fairness of ratings provided by NRSRO's, and would also protect the interests of issuers who frequently need to employ the services of an NRSRO.


/s/ James I. Kaplan

James I. Kaplan
Associaate General Counsel
Northern Trust Corporation