SEC Press pdf 1 KB 6,054 chars

Iosconews79

Exhibit of Director of International Affairs Ethiopis Tafara to Leave SEC

Source PDF JSON

Enriched metadata

Scheme: non-corporate (100%)

Classified non-corporate(confidence 100%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →

Extracted insights

Triples 6

International Organization Of Securities Commission (IOSCO) is publishing Code Of Conduct Fundamentals For Credit Rating Agencies
IOSCO expects full support of CRAs and market participants around the world
Chairman Of The IOSCO Technical Committee, Mr. Andrew Sheng said essential purpose of the Code Fundamentals is to promote investor protection
Mr. Roel C. Campos said approach is more flexible and more effectively enforced than a universal code
IOSCO believes disclosure mechanism will promote compliance with its provisions
Mr. Sheng believes market pressure will ensure CRAs fully comply

PDF

Iosconews79 · Source

Text layers

Extracted body text (6,054c)

OORRGGAANNIIZZAACCIIÓÓNN IINNTTEERRNNAACCIIOONNAALL DDEE CCOOMMIISSIIOONNEESS DDEE VVAALLOORREESS
IINNTTEERRNNAATTIIOONNAALL OORRGGAANNIIZZAATTIIOONN OOFF SSEECCUURRIITTIIEESS CCOOMMMMIISSSSIIOONNSS
OORRGGAANNIISSAATTIIOONN IINNTTEERRNNAATTIIOONNAALLEE DDEESS CCOOMMMMIISSSSIIOONNSS DDEE VVAALLEEUURRSS
OORRGGAANNIIZZAAÇÇÃÃOO IINNTTEERRNNAACCIIOONNAALL DDAASS CCOOMMIISSSSÕÕEESS DDEE VVAALLOORREESS

11 // 22

23 December 2004

MEDIA RELEASE

IOSCO RELEASES CODE OF CONDUCT FUNDAMENTALS
FOR CREDIT RATING AGENCIES

Today the International Organization of Securities Commission (IOSCO) is publishing its Code
of Conduct Fundamentals for Credit Rating Agencies (CRAs). The IOSCO CRA Code
Fundamentals follows an extensive consultation process involving rating agencies, issuers,
investors, academics and financial institutions. It represents a global, converged view of specific
mechanisms CRAs can use to protect their analytical independence, eliminate or manage
conflicts of interest, and help ensure the confidentiality of certain types of information shared
with them by issuers. IOSCO expects the Code Fundamentals will receive the full support of
CRAs and market participants around the world and will strengthen investor and market
confidence in the rating process.

The Chairman of the IOSCO Technical Committee, Mr. Andrew Sheng, said that “The essential
purpose of the Code Fundamentals is to promote investor protection by safeguarding the
integrity of the rating process. IOSCO expects all CRAs to give full effect to the Code
Fundamentals. The reason we devoted so much effort to this policy area is because we recognize
the importance of reliable and accurate credit ratings in helping investors assess the credit risks
they face when making investment decisions”.

Rather than acting as a code of conduct that CRAs are expected to sign onto, the IOSCO Code
Fundamentals are a set of provisions that IOSCO expects all rating agencies will incorporate and
give full effect to in their codes of conduct.

Mr. Roel C. Campos, a Commissioner with the US Securities and Exchange Commission as well
as Chairman of the IOSCO task force that developed the Code of Conduct Fundamentals said:
“We believe this approach is more flexible and more effectively enforced than would be the case
if IOSCO had drafted a universal code for all CRAs to sign onto”. Mr. Campos noted that a
degree of flexibility is warranted because CRAs vary considerably in their size, business models,
rating methodologies and the legal and market circumstances in which they operate.

Central to the Code of Conduct Fundamentals is a disclosure mechanism that IOSCO believes
will promote compliance with the spirit and intent of each of its provisions. The Code of
Conduct Fundamentals obliges CRAs not only to incorporate its provisions into their own codes
of conduct, but also to explain how each provision is addressed.

http://www.iosco.org/pubdocs/pdf/IOSCOPD180.pdf
http://www.iosco.org/pubdocs/pdf/IOSCOPD180.pdf

2/2

If a particular provision of the Code of Conduct is not incorporated into the CRA´s own code of
conduct, the CRA is expected to disclose this fact, explain why it has not incorporated the
relevant provision, and how the objectives of that provision are otherwise addressed. Market
participants will then be able to judge for themselves whether each CRA has implemented the
Code of Conduct Fundamentals satisfactorily and react accordingly.

Mr. Sheng believes that there will be sufficient market pressure on CRAs to fully comply.
“Failure to comply would undoubtedly have an adverse impact on individual CRAs as the
industry and investors become aware of instances of non-compliance. We believe that in order
to gain advantage in the market-place most CRAs will work to ensure their compliance with the
IOSCO Code”.

The release of the Code Fundamentals follows an extensive public consultation process that took
place after a draft of the documents was published in October 2004. IOSCO received
approximately 40 submissions from a wide range of market participants including ratings
agencies, financial institutions and individual investors from around the world. This input proved
to be invaluable in making modifications to the Code. The Task Force issued a statement
outlining their deliberations in early December 2004:

http://www.iosco.org/news/pdf/IOSCONEWS78.pdf

In developing the Code Fundamentals, IOSCO also sought input from the Basel Committee on
Banking Supervision and the International Association of Insurance Supervisors since
maintaining the integrity of the credit rating process is equally important to banking and
insurance as well as to securities regulation.

Prior to developing the Code Fundamentals in September 2003 IOSCO published Principles
Regarding the Activities of Credit Rating Agencies, along with a report briefly describing what
CRAs do and regulatory issues that arise regarding their activities. These Principles outlined
high-level objectives that regulators, CRAs and other market participants should seek to achieve
in order to maintain the quality and integrity of the rating process. Development of the Code
Fundamentals arose after some regulators and CRAs suggested it would be valuable if IOSCO
were to offer more detailed guidance on how CRAs could implement the Principles in practice.
The resulting Code Fundamentals include 52 concrete measures designed to implement the
IOSCO CRA Principles effectively and thoroughly, regardless of the size or business model of
the CRA or the legal and market circumstances in which it operates.

IOSCO has indicated that it may revisit the Code Fundamentals if subsequent developments
indicate that modifications are appropriate.

For further information contact
Mr. Philippe Richard, IOSCO Secretary General 34 (91) 417 55 49 or 650 37 88 98 or

Mr. Andrew Larcos, Public Affairs Officer 34 (91) 417 55 49

OCR text (6,054c · textlayer · 95% conf)