The global code of conduct for credit rating agencies (CRAs) is being revised to reflect the regulatory reforms that have taken place over the past few years.
The International Organization of Securities Commissions’ (IOSCO) published a final report Tuesday that revises and updates its code for rating agencies that aims to strengthen the code by enhancing the provisions designed to protect the integrity of the credit rating process, managing conflicts of interest, providing transparency, and safeguarding non-public information. It also adds measures regarding governance, training, and risk management; and, streamlines its text.
The code, which was first published in 2004, was substantially revised in 2008 in the wake of the global financial crisis. IOSCO then proposed further revisions to the code in February 2014 to account for the fact that CRAs are now supervised by regional and national authorities.
The revisions result, in part, from the experience of regulators in supervising rating agencies; and, the work of the IOSCO’s committee on rating agencies, including a survey examining the key risk controls established by CRAs to promote the integrity of the rating process and the procedures they’ve adopted to manage conflicts of interest.
IOSCO says that the updated code is intended to work in harmony with registration and regulatory oversight measures that have been introduced in the wake of the financial crisis; and, it is intended to continue operating as the international standard for self-governance by rating agencies.