The Bond Market Association has welcomed the International Organisation of Securities Commissions' (IOSCO) initiative to develop code of conduct fundamentals for credit rating agencies, and has emphasised its support for self-regulatory measures, rather than detailed regulation, for these agencies.
In a comment letter, the Association also expressed concern with some of the proposed measures for enforcement of the code, believing that compliance will be best achieved through market mechanisms and appropriate appeal and complaint procedures built into rating agencies own codes of conduct, rather than arbitration.
?If properly implemented by the credit rating agencies within the flexibility afforded by IOSCO, the proposed code fundamentals will greatly assist in furthering the goals of investor protection, fairness, efficiency and transparency of ratings,? says Bertrand Huet, vice president and European legal and regulatory counsel at the Association.
?Given the increased market and regulatory scrutiny of credit rating agencies, investment banks feel it is important to have this forum to efficiently and constructively engage in the debate,? says Rupert Atkinson of Morgan Stanley, a member of the Associations' Credit Rating Agencies Working Group. ?This working group will be actively involved in the current international regulatory debate on credit rating agencies, and will work to facilitate communication on credit rating agency issues among market participants, including the rating agencies, issuers and users of ratings, regulators and other trade groups.?