Treasury associations have called on the Securities and Exchange Commission (SEC) to respond to serious issues raised around the conduct of credit rating agencies.
The thirty International Group of Treasury Associations (IGTA) members, meeting in Sydney, Australia, stated that action is required to effectively address the process by which the SEC designates credit rating agencies, conflicts of interest, abusive practices and transparency in the ratings process and to avoid fragmented and duplicative regulation that would harm global capital markets.
Examples of market abuses identified in recent media accounts include the practice of unsolicited ratings and the punitive impact of the unexplained withdrawal of ratings.
?Credit ratings, especially those from rating agencies that are recognized by the SEC in the United States, are crucial to the efficient operation of global capital markets,? said Olivier Brissaud, Honorary Secretary of IGTA. ?The SEC has been looking at this issue for over a decade but the time for analysis has passed and the time for action by the SEC is now. The entry of other regulators will only cause confusion and inefficiency.
?By creating the Nationally Recognized Statistical Rating Organization (NRSRO) designation, the SEC granted a significant competitive advantage that has led to the near-monopoly conditions that exist in the credit ratings market today,? said Jim Kaitz, CEO of the Association for Financial Professionals (AFP).