The regulatory landscape for CRCs is experiencing a shift globally in terms of ease of doing business and promoting rating business without compromising quality of ratings. Pursuant to the International Organization of Securities Commissions’ (IOSCO) Code of Conduct Fundamentals for Credit Rating Agencies of March 2015, a number of jurisdictions have undertaken various regulatory measures to strengthen oversight on CRCs and to raise the underlying standards. In the same spirit, the Securities and Exchange Commission of Pakistan (“The Commission”) reviewed the existing regulatory framework for CRCs and has issued Credit Rating Companies Regulation, 2016.
These regulations encompasses three broad areas:
1. Licensing Requirements
2. Restrictions, Duties and Obligations of Credit Rating Companies.
3. Accounting and Financial Records
PACRA appreciates SECP’s efforts and finds the regulations a step in the right direction for the capacity building of CRCs. The regulations are expected to build investor confidence in CRCs in the country, and will improve standards of the rating process in line with the international credit rating companies.