SC Revises Guidelines For Credit Rating Agencies

The Securities Commission has issued revised Guidelines on Credit Rating Agencies that are aimed to enhance and strengthen the role, independence, and objectivity of credit rating agencies.

The regulator in a press statement said the enhancement is part of its continuous efforts to inculcate and promote greater accountability and self-regulation within the capital market and amongst the capital market participants, in line with the broader strategic objectives of the Capital Market Masterplan 3.

Chairman Dato’ Seri Dr. Awang Adek Hussin said that the Malaysian bond and sukuk market is a key segment of the capital market for corporate fundraising activities, as reflected by active and innovative issuances in recent years, particularly in the sustainability and Islamic-related segments. “This development also points to greater demand and need for independent, high quality, timely and reliable assessments to enable investors to make informed investment decisions and at the same time, promote better market confidence,” he added. He also said the revised CRA Guidelines emphasised the significant role of credit rating agencies in promoting strong governance and upholding the integrity of their rating
process.

“Effective internal controls and board governance are of paramount importance as credit rating agencies continue to grow their businesses as these will better equip them to, amongst others, safeguard the integrity of their rating processes and assessments as well as meet their stakeholders’ expectations,” he added. The key amendments in the CRA Guidelines include added measures in relation to board governance and independence, and fit and proper requirements on the controller, compliance officer and the senior management of CRAs and their rating holding companies.

In addition, the enhanced CRA Guidelines also incorporate changes in the SC’s regulatory filings and processes as well as the adoption of regulatory forms for greater operational efficiency.

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