Ratings agencies monitored closely
(3 June 2011 – Australia) In a bid to boost the integrity of the financial system, Australian Securities & Investments Commission (ASIC) released a consultation paper on obligations relating to quality and integrity of ratings agencies and their processes.
The content of compliance reports that credit rating agencies must lodge with the watchdog every year and will cover ratings processes and management of conflicts of interest.
ASIC chairman Greg Medcraft said agencies such as Standard & Poor's and Moody's would be required to detail how they had met the conditions of their licence. This would include compliance with the International Organisation of Securities Commissions' code of conduct fundamentals for credit rating agencies.
'ASIC sees establishing reporting standards, together with setting Australian Financial Services Licence conditions and ongoing industry-wide surveillance, as its core regulatory tools in supervising CRAs,' Mr Medcraft said.
'Reporting by CRAs helps give ASIC, and therefore the broader market, insight into the operations of CRAs and, as such, it gives some degree of reassurance to investors in the integrity of issued credit ratings.'
ASIC chairman Greg Medcraft said agencies such as Standard & Poor's and Moody's would be required to detail how they had met the conditions of their licence. This would include compliance with the International Organisation of Securities Commissions' code of conduct fundamentals for credit rating agencies.
'ASIC sees establishing reporting standards, together with setting Australian Financial Services Licence conditions and ongoing industry-wide surveillance, as its core regulatory tools in supervising CRAs,' Mr Medcraft said.
'Reporting by CRAs helps give ASIC, and therefore the broader market, insight into the operations of CRAs and, as such, it gives some degree of reassurance to investors in the integrity of issued credit ratings.'
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