Aug 28 2007 Saibal Dasgupta in Beijing
The China Securities Regulatory Commission has released a set of provisional measures that will create a framework for licensing credit ratings agencies in the securities market. A significant feature of the new rules is that only Chinese companies will be able to obtain a licence to act as credit ratings agencies. Foreign credit rating companies will, therefore, need to incorporate themselves in China to obtain a licence, sources explained.
The measures, which will come into force on September 1, will help the growth of a stable bond market and a multi-level capital market, the regulator said.
It added that, with the exception of treasury bonds, all bonds, assets-backed securities and other structural financing securities with fixed-returns or debt approved by the CSRC will require rating classification.
Capital
A rating agency seeking a licence in China must have paid-up capital and net assets or more than $2.6m, the CSRC said.
The applicant must prove that it has a comprehensive business system that covers credit levels and distinct definitions, rating standards and procedures, and ratings results publishing. Any agency must also have information confidentiality systems.
A licensed rating agency would not be allowed to use the services of anyone whose relatives hold more than five per cent shares of a company that is in the process of being rated, the regulator said.
