CESR launched a consultation on the Role of Credit Rating Agencies in Structured Finance.
“CRAs’ concerted initiatives put forward so far are not enough” Ingrid Bonde, Chairperson of the CESR task force on credit rating agencies, said. “the rating industry response needs to be supported by further prompt and firm actions”, she added.
The consultation paper covers in particular the transparency of rating processes and methodologie, the monitoring of rating performance, and CRA staff resourcing.
The key focus of the consultation is on:
- whether the nature of CRA interaction with issuers during the structured finance presents additional, un-managed or poorly managed conflicts of interest leading to reduced rating integrity;
- whether the CRAs’ activities constitute advisory activity in this area;
- whether some of the ancillary services offered may lead to potential conflicts of interest, and - whether greater disclosure is required on the fees CRAs earn from structured finance activity as a result of the “issuer pays” model and the specific “success” fee structure for this activity.
A hearing will be held on 26 March 2008 (CRAs excluded).
The assessment of responses to consultation and preparation of the final report will take place in April 2008. The final report will be submitted to the Commission mid May 2008.
Deadline for responses is 31 March 2008
Press release
Consultation document
© Graham Bishop
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