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CSA Revises Proposals to Regulate Credit Rating Agencies

  • By Andrew Deichler
  • Published: 2011-04-05

The Canadian Securities Administration (CSA) has revised proposals for regulating designated credit rating agencies and organizations. The CSA introduced the initial proposals in July.

Significant changes to the proposals are as follows:

·         Designated rating organizations can no longer diverge from the included code of conduct, based substantially on the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies, unless they obtain exemptive relief

·         Further provisions, beyond those mandated in the IOSCO Code, would be required of credit rating organizations

·         Compliance officers could not contribute to the development of credit ratings, methodologies and models, and compensation for most employees of designated rating organizations

·         Directors and officers of designated rating organizations or organizations applying for designation would not need to submit personal information forms.

Additionally, all jurisdictions except Ontario published proposed amendments to Multilateral Instrument 11-102 Passport System, which allows the passport system to be used by credit rating organizations applying for designation, as well as designated rating organizations seeking exemptive relief. In Ontario, an equivalent policy has been proposed that would determine how the process for filing and the review of an application to become a designated rating organization and the passport jurisdictions.

The revised proposals recognize the trend in other jurisdictions towards imposing civil liability on credit rating organizations. The CSA has not yet proposed this type of action, but will continue to monitor these developments.


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