The Australian Securities and Investments Commission (ASIC) published an information sheet (INFO 143) for credit rating agencies providing services in Australia. It gives guidance on the meaning of certain conditions that apply to these credit rating agencies under their Australian financial services (AFS) licence.
It covers the scope and purpose of Australian Securities and Investments Commission’s guidance, separating advisory services from credit rating services, applying methodologies in a continuous manner, timely disclosure of actual and potential conflicts of interest, periodic review of methodologies and models, and review of and disclosure about affected ratings after material changes. The conditions covered by Australian Securities and Investments Commission’s information sheet reflect certain provisions of the International Organization of Securities Commissions (IOSCO) Code of Conduct Fundamentals for Credit Rating Agencies (IOSCO Code), which credit rating agencies must adopt with specified modifications under their Australian financial services licence.
The guidance is provided in the context of the assessment by the European Securities and Markets Authority (ESMA) as mandated by the European Commission of whether Australia’s regulation and supervision of credit rating agencies is equivalent to the European Union’s Regulation on Credit Rating Agencies (EU Regulation).
Under the EU Regulation, regulation and supervision of credit rating agencies in Australia that is at least as stringent as that in the European Union is necessary for ratings prepared in Australia to be endorsed for use in the European Union. Regulation and supervision of credit rating agencies in Australia needs to be considered equivalent in order for ratings prepared in Australia by a credit rating agency without any legal presence in the European Union to use those ratings in the European Union
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