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