Comment sought on Credit Ratings Service Act

The Credit Rating Services Act was adopted by Parliament and signed by President Jacob Zuma in January this year.

The Act ensures that South Africa has legislation in place on an "at least" equivalent basis with international regulatory requirements and in line with the G20 requirement of regulated and accountable credit rating agencies at a global level.

The Rules have been drafted are expected to elicit public debate and discussion with Parliaments Standing Committee on Finance and are required as part of the subordinate legislation of the Act. The Rules clarify the requirements of the legislation and set out the process for the registration of credit rating agencies in South Africa as required by the Act.

The Rules cover the following responsibilities and requirements:

• Organisational requirements;
• Independence and managing of‚ and avoidance of conflicts of interest;
• Quality and integrity of credit ratings;
• Presentation of credit ratings;
• Additional obligations in relation to structured finance transactions;
• Disclosures and record-keeping;
• Advertising;
• Guarantee and insurance cover;

• Control of and prohibition of incentives;Responsibilities to investors and the public.