By Karey Wutkowski and Rachelle Younglai

WASHINGTON (Reuters) - Securities regulators proposed weaning investors and Wall Street institutions from over-reliance on credit ratings, part of changes to the rating industry prompted by the subprime mortgage crisis.

The Securities and Exchange Commission voted 3-0 on Wednesday in favor of reducing reliance on credit ratings, including proposing to eliminate a requirement that money market funds hold highly-rated securities.

"The official recognition of credit ratings... may have played a role in encouraging investors' overreliance on ratings," SEC Chairman Christopher Cox told an open meeting of the commission.

Rating agencies such as Moody's (MCO.N: Quote, Profile, Research), McGraw-Hill Cos' (MHP.N: Quote, Profile, Research) Standard & Poor's and Fimalac SA's (LBCP.PA: Quote, Profile, Research) Fitch Ratings have been blamed for contributing to the crisis by assigning top ratings to mortgage-backed securities that later deteriorated.

For months, SEC staff combed the agency's rules and forms and found 44 references to credit ratings. On Wednesday, the investor protection agency proposed changes to 38 of them.

"The recommendations we consider today are consistent with the objective of having investors make an independent judgment of the risks associated with a particular security," Cox said.

Cox said high credit ratings are often not an indication of liquidity or low price volatility for structured financial products, such as mortgage-backed securities.

Current rules do not allow a money market fund to rely solely on credit ratings when making investments, but the proposals would further reduce emphasis on ratings. The funds hold $3.5 trillion of investor assets according to the SEC.