Regulating rating agencies: inevitable, but not the solution
Both the US SEC and the EU are now pushing hard for a tougher regulatory regime for rating agencies. They will get their way — but to whose benefit? The rating agencies already try very hard to be transparent, and have volunteered to tackle financial incentives that could bend analysts’ judgment. Financial markets should not be satisfied with this regulatory fiddling, but should push for change in ratings that addresses their actual substance.
It looks almost inevitable that the rating agencies will be subjected to stricter regulation around the world.
The US Securities and Exchange Commission is consulting on new rules for nationally recognised statistical rating organisations (NRSROs), designed to manage conflicts of interest and improve transparency. The EU now seems
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