SC enhances governance, independence of credit rating agencies

KUALA LUMPUR: The Securities Commission Malaysia (SC) today issued the revised Guidelines on Credit Rating Agencies (CRA Guidelines), which among others, enhance and strengthen the role, independence and objectivity of credit rating agencies (CRA) in providing credible credit rating opinion.

The enhancement is part of the SC’s 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.

SC chairman Datuk’ Seri Dr Awang Adek Hussin said that the Malaysian bond and sukuk market is a key segment of the capital market for corporate fund raising 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.

Awang Adek 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 CRA and their rating holding companies.

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