IOSCO Publishes Report on Code of Conduct Fundamentals for Credit Rating Agencies

IOSCO published a consultation report titled Code of Conduct Fundamentals for Credit Rating Agencies, which proposed significant revisions and updates to the current IOSCO code of conduct for credit rating agencies ("IOSCO CRA Code").

The IOSCO CRA Code was first published in 2004, when few jurisdictions had laws governing the activities of CRAs. It was later revised in 2008, after the outbreak of the global financial crisis, to include significant disclosure provisions. According to the report, the IOSCO CRA Code is intended to offer a set of "robust, practical measures" as a guide to and framework for CRAs with respect to "protecting the integrity of the rating process, ensuring that issuers and users of credit ratings, including investors, are treated fairly, and safeguarding confidential material information provided them by issuers."

The revisions proposed in this report are designed to strengthen the IOSCO CRA Code by:

• enhancing provisions regarding the protection of the integrity of the credit rating process;
• managing conflicts of interest, providing transparency and safeguarding nonpublic information;
• adding measures regarding governance, training and risk management; and
• seeking to improve the clarity of the IOSCO CRA Code.

IOSCO's revisions to the IOSCO CRA Code take into account the fact that CRAs are now supervised by regional and national authorities. The goal is to create an updated IOSCO CRA Code that works in harmony with the CRA registration and oversight programs that many IOSCO members have implemented in recent years.

Comments Due: March 28, 2014. Send comments to [email protected], with the subject, "Code of Conduct Fundamentals for Credit Rating Agencies."

See: IOSCO Report.