Dubai Financial Services Authority has introduced Proposal to Regulate Credit Rating Agencies Registered under the authority and promote to structure credit rating agencies in Middle east in light of changing global financial and economical chemistry.
This proposal stems from the DFSA’s policy of conforming to international regulatory standards. Poor quality credit ratings assigned by CRAs, particularly to complex structured financial products, are generally recognised as a contributor to the financial markets crisis of 2008. Credit Ratings are relied on by members of the public for investment purposes, market participants for credit assessments of their counterparties and, regulators for regulatory purposes. Therefore, in the wake of the crisis, the international standard setters, particularly the International Organisation of Securities Commissions (IOSCO), placed new emphasis on ensuring that CRAs are subject to adequate regulation and supervision.
The proposals in this paper are designed to meet the IOSCO standards relating to the regulation of CRAs. In designing the proposed regime, DFSA has followed the principles based approach adopted by IOSCO, with recourse to the CRA regimes under EU Regulation 1060/2009 and those adopted by Hong Kong and Singapore where appropriate.
