13 March 2009

IOSCO update on CRA oversight

The review found that the three largest CRAs, Fitch, Moody’s and Standard & Poors, have substantially implemented the revisions of the IOSCO CRA Code. Also, the Japan Credit Rating Agency is in complete compliance with the IOSCO CRA Code.

IOSCO published the results of its work reviewing the implementation of the CRA Code of Conduct, including a Note being sent to the G-20 and the FSF regarding its use as the basis for international oversight, and mechanisms to assure adequate cross-border supervision of globally active CRAs.

 

The report found that a larger proportion of the CRAs reviewed were aware of the IOSCO CRA Code, and have taken steps to incorporate its provisions.

 

The review found, among others, that the three largest CRAs – Fitch, Moody’s and Standard & Poors – have substantially implemented the revisions of the IOSCO CRA Code. Also, the Japan Credit Rating Agency is in complete compliance with the IOSCO CRA Code.

 

The CRA Task Force believes it unfortunate that more CRAs have not adopted the 2008 revisions to the IOSCO CRA Code. However, the Task Force has been informed by a number of CRAs that they are either in the process of updating the codes of conduct to reflect the May 2008 revisions, or plan to revisit their codes of conduct to reflect some of the issues raised in this report.

 

14 of the CRAs reviewed did not address the 2008 revisions. However, 11 of them had partially or substantially implemented the 2004 IOSCO CRA Code.

 

IOSCO believes that the CRA Code serves as a template for regulation, thereby facilitating a convergence of approaches to CRA regulation by individual jurisdictions. In this way, conflicts of law can be avoided, and common expectations with regard to CRA global activity will be more easily satisfied.

 

With regard to the supervision of globally-active CRAs, IOSCO has developed a model examination module to be used, as appropriate, by those IOSCO members that regulate and inspect CRAs. IOSCO currently explores options regarding supervisory colleges and/or bilateral co-operation arrangements and their possible use in the oversight of CRAs. These arrangements would be particularly useful for the largest CRAs whose operations are global.

 

Press release

Report

 

© IOSCO