Enhanced Disclosure and Transparency Norms for Credit Rating Agencies

SEBI issued a circular dated May 30, 2018 (‘Circular’) setting out guidelines to enhance the governance, accountability and functioning of Credit Rating Agencies (‘CRA’).

i. Review of Ratings All cases of requests by issuers for review of the rating(s) provided to their instrument(s) by the CRA are required to be reviewed by a rating committee of the CRA that will consist of a majority of independent members[1].

ii. Disclosures for non-acceptance of Ratings: All non-accepted ratings have to be disclosed on the CRA’s website for a period of 12 months from the date of such rating being disclosed as a non-accepted rating.

iii. Rationalisation of Disclosures: CRAs are required to upload a rating summary sheet presenting a snapshot of the rating actions carried out during the half-year on their websites, on a half-yearly basis, within 15 days from the end of the half-year (March / September). These ratings must be segregated into securities and financial instruments other than securities.

[1] Persons not having any pecuniary relationship with the CRA or any of its employees.

Published In:Inter Alia - Quarterly Edition - June 2018 [ English Chinese japanese ]
Date: June 1, 2018