SFC Sets Up Credit Rating Agency Regime; Legislative Amendments Expected in Q1 2011

SFC chief executive Martin Wheatley called the new credit rating agency regulatory regime an important milestone for Hong Kong, keeping local regulation aligned with international approaches. The SFC will work with the government to amend the Securities and Futures Ordinance, with the legislative process expected to complete in the first quarter of 2011, followed by licensing of rating agencies and analysts operating in Hong Kong.

Why regulate credit rating agencies?

The financial crisis exposed their flaws, and global regulation is tightening. As international regulation of rating agencies continues to evolve, the SFC says it will closely monitor overseas developments to keep the local regime consistent with other major jurisdictions.

What does the regime cover?

A licensing system plus a code of conduct. The Code of Conduct for Persons Providing Credit Rating Services has been lightly revised to dovetail with the new regime. The SFC’s consultation conclusions summarise 21 respondents’ views and the regulator’s responses, ahead of drafting the legislative amendments.

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