International Organization of Securities Commissions Reports on Other Products and Services Offered by Credit Rating Agencies

The International Organization of Securities Commission has published a final report on the non-traditional products and services offered by credit rating agencies. The report follows IOSCO's consultations and other panel discussions with CRAs, users of other CRA products and other market participants.

IOSCO considers that these types of products and services are important because market participants use them to make investment and other credit-related decisions and issuers and obligors use them to make decisions about whether to obtain a credit rating from a particular CRA. Examples of the products and services include private ratings, confidential ratings, expected ratings, indicative ratings, prospective ratings, provisional ratings, preliminary ratings, credit default swap spreads, bond indices, research and portfolio assessment tools. The report groups these products and services into six categories, providing descriptions for each category, namely: research, private, non-final, part of rating process, outside rating process and hybrids. The report also discusses business practices and trends within the industry, including regulated CRAs and the unregulated parents of CRAs. The report notes that some other CRA products share similar processes and features with traditional credit ratings and that many CRAs create separate structures or business line organizations to manage any conflicts of interest arising between their credit rating services and other services and products.

IOSCO notes that users of credit ratings and other CRA products often believe that they are conducting business with the regulated CRA, regardless of which entity within the CRA's group issues the other CRA product. In addition, it is not clear whether the activities are subject to the IOSCO 2015 Code of Conduct Fundamentals for Credit Rating Agencies. IOSCO concludes that, despite the manner in which CRAs have organized their businesses, all the activities of a CRA that result in a traditional credit rating or other CRA product should be "responsive to the spirit of the four high level objectives" set out in the IOSCO Statement of Principles regarding the activities of CRAs, published in 2003.

View the report.

View the Statement of Principles regarding the activities of CRAs.

View the Code of Conduct.