ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has revised the existing Credit Rating Companies Rules, 1995, for better governance of the credit rating agencies (CRAs).
The draft rules have been notified in the official gazette vide SRO. No 642(I) 2014 to elicit public comments.
The rules are also available on the SECP's official website (www.secp.gov.pk) for review and comments by the public, says a statement issued by the commission here Thursday.
The CRAs play an important role in the financial system of a country particularly in the management and development of a vibrant and healthy debt capital market.
The CRAs provide investors and other stakeholders' information regarding the creditworthiness of an individual, company, agency or a country.
The investors, including the fund managers, rely on the ratings assigned by the CRAs while making investment decision in debt instruments.
The regulatory landscape for the CRAs has experienced a shift on the global scale.
The criticism of the CRAs' role in the financial crisis of 2008 forced the regulators and market players to re-examine their role and responsibilities with greater scrutiny.
Therefore, the SECP felt it necessary to ensure that domestic CRAs continually adhere to international standards and best practices.
The salient features of the revised draft rules include redefinition of the term credit rating, making the definition more comprehensive, setting the minimum equity requirement for registration of any company as a CRA, procedure for commencement of credit rating business in Pakistan by a foreign CRA, circumstances where registration is not granted or renewed; procedure for suspension and cancellation of registration, applicability of code of conduct for CRAs, requirements for changes in key management position and appointment of the compliance officer and procedure relating to investigation and inspection of CRAs.
The investors and other stakeholders attach immense importance to the CRAs' assessments and opinions.
The growing importance placed on the CRAs' assessments and opinions requires of them to conduct their credit-rating activities in accordance with the principles of integrity, transparency, quality and good governance.
Comments
Comments are closed.