The guidelines enhance the agencies’ standards in key areas such as transparency of rating criteria and policies, objectivity of rating process, managing conflicts of interest, and will also enable the Securities Commission to supervise CRAs in a more vigorous manner.
Major jurisdictions, including the US, European Union, Japan, Australia and India have also undertaken various regulatory measures to strengthen oversight on CRAs and to raise the standards of CRAs.
The Securities Commission Malaysia said it is engaged in structured consultations with key players comprising institutional investors, credit rating agencies, issuers, advisors and trustees in the domestic bond market, on the development of these guidelines.
The new guidelines are aimed at enabling Malaysia’s credit rating agencies to converge with the international standards and best practices set out by IOSCO and other advanced jurisdictions.
Global regulatory and supervisory standards on CRAs have recently experienced a dramatic shift after the global financial crisis. Revisions to the International Organization of Securities Commissions (IOSCO)’s Objectives and Principles of Securities Regulation in June 2010 now subject CRAs to adequate levels of oversight, through a system of registration and on-going supervision.
