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February 10, 2014

Consultation Report on Credit Rating Agencies | IOSCO

In a press release (PDF) announced today, IOSCO announced their publication of a consultation report on the Code of Conduct Fundamentals for Credit Rating Agencies (PDF).

 

In a press release (PDF) announced today, IOSCO announced their publication of a consultation report on the Code of Conduct Fundamentals for Credit Rating Agencies (PDF).

This is the first update to the guidelines since 2008, when a revision to the original 2003 / 2004 guidelines was published in response to the subprime mortgage crisis. The 2008 revisions had a focus on the supposed conflict of interest between ratings agencies and banks, particularly with respect to the rating methodologies that had been applied to securitized cash (and synthetic) MBSs and CDOs. 

The revisions proposed for the 2014 guidelines are intended to do the following:

  • Enhance existing measures (e.g. transparency, integrity, managing conflicts of interest, protecting private information)
  • Add new measures (e.g. governance, training, risk management)
  • Improve overall clarity

IOSCO have helpfully provided Appendix B to the consultation report, which tracks the changes between the exact wording of the 2008 guidelines and the 2014 guidelines. This will save countless hours for those tasked to parse through and understand the 2008 – 2014 changes.

-Ben L.


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