Home / Companies / News /  Sebi issues measures to strengthen firewall between credit rating agencies and their non-rating entities

MUMBAI : The Securities and Exchange Board of India on Wednesday issued a circular pertaining to measures mandated to strengthen the firewall between Credit Rating Agencies (CRAs) and their non-rating entities. As per the circular, Sebi has asked the rating agencies to formulate a policy on separation or firewall practices with the non-rating entities and document the same in their internal operational manuals or governing document.  

The Board of Directors of these Credit Rating Agencies shall ratify and revise such policies which may cover Nature and extent of sharing of infrastructure, officials/employees or resources, if any, between the CRA and the non-rating entity, including specification on whether such arrangement is temporary.   

The policy must cover guidance to employees on sharing of information or resources, if any, between the CRA and the non-rating entity in order to mitigate any potential or actual conflict of interest, Sebi said. 

Additionally, CRA shall disclose on its website, the details of any common director or Chief Executive Officer or Managing Director between the CRA and the non-rating entity. Such disclosure shall be updated by the CRA on the first working day of each month.  

 The circular will come into effect on 1 January 2023.

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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