Commission asks for additional request on role of CRAs

12 September 2007

CESR received an additional request from the Commission to review the role of credit rating agencies. The Commission particularly asks about the interaction between credit rating analysts and arrangers of structured finance products. CESR should also assess the extend to which CRAs follow the IOSCO Code and indicate whether the Code adequately and effectively addresses the potential conflicts of interest issue particularly in respect of securitization and structured credit. CESR will also have to assess whether CRAs have adequate resources to understand the rapidly changing and growing complex structured finance market.

Further issues CESR should assess include:

the CRA’s rating methodologies;

the quality of ratings and the timing of ratings decisions; and

an examination of CRAs renumeration structures.

Deadline for the CESR response is 30 April 2008.

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