The International Organization of Securities Commissions’ Task Force on Credit Rating Agencies (CRAs) says that the major credit rating agencies have largely implemented the latest revisions to IOSCO’s code of conduct for CRAs.

A review found that seven out of the 21 CRAs reviewed have implemented the 2008 IOSCO CRA Code provisions: the three largest CRAs — Fitch, Moody’s and Standard & Poors — have “substantially implemented” the revisions of the code, it said; the Japan Credit Rating Agency is in complete compliance with the code; and DBRS “substantially incorporates the IOSCO CRA Code with a few exceptions”.

Canadian securities regulators have proposed a new regulatory regime for CRAs in Canada, which would largely require them to comply with the IOSCO code, or explain why they haven’t adopted certain provisions.

So far, 14 of the CRAs reviewed have not addressed the latest revisions of the IOSCO code. A number of factors may have contributed to this including the proposed EU regulations, resource constraints and the fact that the 2008 revisions were aimed at structured finance products which does not necessarily apply to CRAs who do not offer these ratings, IOSCO noted. Of those, 11 of them had partially or substantially implemented the 2004 version of the code.

The Task Force, which developed the code and handles other CRA-related projects, also announced that it is being converted into a permanent standing committee of IOSCO’s Technical Committee. “This permanent committee will allow IOSCO to keep abreast of the developments in the CRA industry, as well as facilitate convergence of regulatory approaches to CRAs,” it said.

IE