US regulators clip credit rating agencies’ wings
18 Sep 2009
The US regulators have put their weight on credit rating agencies demanding more disclosures on their rating history.
Under the new rules finalised by the US Securities and Exchange Commission (SEC) yesterday, credit rating agencies will have to reveal more information about past ratings so investors can compare their relative performance. The information would be publicly disclosed on a delayed basis, with up to a one- or two-year lag, to protect the rating agencies' proprietary information.
This requirement would apply regardless of whether agencies are paid by issuers or by investors.
SEC also asked creators of financial products to share data with all credit raters.
Credit rating agencies were blamed for fuelling the financial crisis by assigning and maintaining high ratings on toxic mortgage-backed securities
SEC chairman Mary Schapiro said the industry needs to be subjected to stronger regulation because investors frequently consider ratings in making investment decisions.
