Regulations for rating firms okayed

Regulations for rating firms okayed

Regulations for rating firms okayed ISLAMABAD: The Securities and Exchange Com­m­ission of Pakistan (SECP) on Friday accorded app­roval to Credit Rating Companies Regulations, 2016.

A new regulatory regime has been introduced for credit rating companies (CRC) which is based on international best practices and has removed shortcomings in the existing regulatory framework.

SECP held comprehensive consultation sessions with all key stakeholders prior to the finalisation of the regulations.

The new regulatory regime introduces various new requirements and strengthens the existing requirements for the CRCs to help achieve the objectives of investor education. It also ensures continuity of business of the existing CRCs through a phased implementation of certain new requirements.

A significant aspect is the introduction of detailed licencing regime for the CRCs with fit and proper criteria for promoters, chief executives, directors and senior management officers.

In order to promote new entrants into the market, the financial resource requirement has also been introduced in the new regulatory framework and to promote corporate norms and continuity in the business, categories of shareholders have been prescribed with a cap on their shareholdings.

In line with the principles set out by the Interna­tional Organisation of Securities Commission, detailed business conduct and internal control requirements have been introduced to ensure that the interests of investors and other stakeholders are adequately protected.

Given the significance of quality of the ratings process, enhanced role for rating committee has been prescribed with detailed fit and proper criteria for members of the rating committee and rating analyst.

Source: http://www.dawn.com/news/1275714/regulations-for-rating-firms-okayed

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