The designation is a timely one for the market, according toRealpoint executives, as the firm is planting a flag as an NRSROthat evaluates securities from the investor – not the issuer –perspective. Perhaps unfairly, Moody's, S&P and others havecome under fire over the years – and certainly after the creditmarket implosion – for not taking investors' interest as much intoaccount as they rate securities. NRSROs like Moody's are paid bythe issuer of the debt for its ratings – a conflict of interest,critics of the system say.

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Realpoint, which has been rating structured securities for thepast seven years using a subscription-based model that chargesinvestors to rate the debt, wants to base its NRSRO activities onthat same model, Robert Dobilas, CEO and president of Realpoint,tells GlobeSt.com. "We have been in discussion with several partiesin the industry and are working with some of the issuers right nowon how to accomplish that." With a NRSRO designation, issuers cannow hire Realpoint, which covers 11,000 securities on a monthlybasis, including CMBS.

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He says he doesn't expect to rival the big three – FitchRatings, along with Moody's and S&P. Rather, Dobilas viewsRealpoint's new role in the market as a way to give investors "analternative view of a security." "We decided to apply for NRSROstatus late last year because of the condition of the financialmarket – we decided it was time for a subscription-based ratingmodel to be introduced into the process." The SEC's attitudetowards NRSROs shifted as well, which also accounted in part forRealpoint's decision to throw its hat in the ring. "It was onlyrecently it adopted a stance of wanting to see more competition,"Dobilas says.

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At the same time, though, Realpoint is entering the market as itis likely poised to undergo significant flux. The SEC is seriouslyconsidering implementing changes in how rating agencies mustoperate. Some of these suggested changes – such as makinginformation that one NRSRO uses to rate a security available to allNRSROs – the company agrees with, says Joe Petro, director of salesat Realpoint.

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"That move alone would give investors more choice," he tellsGlobeSt.com. "It's not enough to increase the number of licensedNRSROs – this has to be coupled with more access to data."Otherwise, as Petro sees it, it will be "business as usual" andissuers will continue to "shop around for rating agencies theylike."

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Other changes the SEC is proposing however -- namely thesuggestion that structured securities such as CMBS receive adifferent rating than bonds – Realpoint does not want to see go ineffect. Like many in the industry, Petro and Dobilas believe aduel-track rating system for structured securities would unfairlytaint those securities in the eyes of investors as more dangerous;especially for CMBS, Petro says, which has been unfairly lumped inwith the RMBS market.

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