Global securities regulators are proposing to further tighten the rules governing credit rating agencies (CRAs).
The International Organization of Securities Commissions (IOSCO) published a report today proposing a series of “significant” revisions to its current code of conduct for rating agencies. The code, which was first established in 2004 and overhauled in response to the global financial crisis, forms the basis of regulatory oversight of the CRAs in a number of jurisdictions, including Canada.
IOSCO says that the proposed revisions are designed to strengthen the code by: enhancing its provisions that deal with protecting the integrity of the credit rating process, managing conflicts of interest, ensuring transparency, and safeguarding non-public information. It also adds new measures regarding governance, training, and risk management; and, aims to improve its clarity.
The proposals are based on the experience of IOSCO members in supervising CRAs, along with its own work on CRAs, including a survey report examining the key risk controls established by the rating agencies. “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,” it notes.
Comments on the proposals are due by March 28.