Credit Rating Agency

CRA的缺点:

Greater competition for fees under the issuer-pay model may very well increase the risk of a classic “race to bottom” as many rating agencies. Exacerbating the structural bias that is already built into the industrial organization. Some people suggest that credit rating should be substituted with credit spreads or credit default swap spreads. A credit spread is the difference in yields of bonds from specific benchmark such as Treasury instruments of the same duration. A CDS is bond insurance in which the protection buyer will pay a premium to an insurer to protect against default, and if a default occurs the insurer pays the difference between the face value of the debt and its market value. The risk premium not only relate to just the unique risk of a frim, but also include exogenous factors such as geographic or political risk.

A new approach of regulation:

Following the Enron scandal,(安然丑闻) the EC asked the Committee of European Securities Regulators to issue a report on whether a stronger regulatory framework was necessary. In 2005, CESR issued a report that stated no further legislation was necessary to regulate CRAs because the EU directives covered CRAs indirectly and the industry was generally in compliance with the IOSCO code. However, the financial crisis led Europe to reconsider this advice. Indeed, in 2009, the European Parliament adopted a "Proposal by the European Commission for a Regulation on Credit Rating Agencies" (the "Proposal"). CRAs operating in Europe are now subject to mandatory registration and, in 2010, the European Security Markets Authority ("ESMA") was chosen as the body to supervise CRAs." On May 30, 2012, the EC published regulatory technical standards for CRAs. In addition, on October 5, 2012 the EC adopted three implementing decisions, which confirm that the rules in place for CRAs in the United States, Canada, and the Australia are equivalent to the EU rules on credit rating agencies, which allows smaller CRAs in the...