By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The International Organization of Securities Commissions (IOSCO) Monday said it’s seeking inputs on Code of Conduct Fundamentals for Credit Rating Agencies in order to protect the integrity of the rating process.
Apart from this, IOSCO said it intends to ensure that issuers and users of credit ratings, including investors, are treated fairly, and safeguarding confidential material information provided them by issuers.
The global capital market regulator affirmed that the proposed revisions are designed to strengthen the IOSCO CRA Code by adding measures regarding governance, training, and risk management; and seeking to improve the clarity of the IOSCO CRA Code.
IOSCO said its CRA Code was first published in 2004 when few jurisdictions had laws governing activities of CRAs.
According the global securities commission, the CRA Code was later revised in 2008 after the outbreak of the global financial crisis to include significant disclosure provisions that addressed concerns regarding the quality of information that CRAs relied on. ‘’Suggestions that CRAs were too slow to review existing ratings and make downgrades as appropriate, and the possible conflict of interest arising from CRAs advising issuers on how to design structured finance products, IOSCO said.
‘’ IOSCO proposes to revise the IOSCO CRA Code to take into account the fact that CRAs are now supervised by regional and national authorities. The goal is to create an updated IOSCO CRA Code that works in harmony with the CRA registration and oversight programs that many IOSCO members have implemented in recent years, and that continues to operate as the international standard for CRA self-governance,’’ the commission affirmed.
It said the proposed revisions result, in part, from the experience of its members in supervising CRAs. ‘’They also are informed by IOSCO´s previous work on CRAs, including a survey report describing the key risk controls established by CRAs to promote the integrity of the credit rating process and the procedures established to manage conflicts of interest,’’ the commission said.
The global capital market regulator said those willing to make in inputs in the Code of Conduct Fundamentals for CRA’s should do so on or before March 28, 2014.
