SC reviewing framework to strengthen rating objectivity
10 June 2022 | Kuala Lumpur
The Securities Commission Malaysia (SC) would like to reiterate that given the critical role credit rating agencies play in providing credible credit rating opinion, the independence and objectivity of credit rating agencies’ credit assessment process and rating decisions should never be compromised.
To ensure this, the SC’s Guidelines on the Registration of Credit Rating Agencies (CRA Guidelines) have set out the obligations that a credit rating agency (CRA) must continuously comply with. These include subjecting the appointment of CRAs’ board members and CEOs to fit and proper assessment as well as the SC’s approval.
Other requirements include the establishment of a rating committee -- comprising experienced, qualified and independent members -- to assign and decide on all credit ratings, thus avoiding board and shareholders involvement in rating discussions and decisions. Additionally, the chair of the rating committee must be a qualified and independent member.
The SC will continue to take pro-active measures to strengthen rating independence and objectivity, and where required, impose additional conditions to approvals given to applicants. As such, the SC is reviewing the existing framework, including on rating committees and their composition.
In discharging its duties to ensure fair, efficient and transparent market, the SC will continue to adhere to its robust decision-making process in line with its strict governance protocols.
SECURITIES COMMISSION MALAYSIA