SIFMA’s Credit Rating Agency Task Force Supports SEC Proposals

Release Date: June 25, 2008
Robin Francis, (212) 313-1168, 

SIFMA's Credit Rating Agency Task Force Supports SEC Proposals Allowing Continued Use of Ratings 

New York, NY, June 25, 2008 - The Securities Industry and Financial Markets Association's (SIFMA's) Credit Rating Agency Task Force supports the aspects of today's Securities and Exchange Commission's (SEC's) proposal on rules relating to Nationally Recognized Statistical Rating Organizations that allow the continued use of ratings.

"We agree completely with the SEC that attention should be paid to over-dependence on ratings," said Deborah Cunningham, co-chair of SIFMA's Credit Rating Agency Task Force and chief investment officer of Federated Investors. "It is important that we guard against embedded over-reliance on ratings in SEC regulations, as well as in investor guidelines, state laws, Basel II, and bilateral contracts," stated Cunningham.

"At the same time," Cunningham continued, we understand and appreciate that the written proposal will, when released, continue to allow reliance on ratings as appropriate in the areas of Rule 2a-7 and net capital rules. Simply stripping ratings out of the rules would not have been helpful. Of course, we look forward to reviewing and commenting on the published written proposal."

"The solution to the credit rating problems is to allow continued appropriate use of ratings, while adding greater transparency to the process and more information for those who use ratings, so that ratings can be more effective risk management and investment tools," said Cunningham.

SIFMA task force members are from the US, Europe, and Asia, and include asset managers, underwriters, and issuers. Among them are experts in structured finance, corporate bonds, equities and municipal securities. The task force has been designated by the President's Working Group on Financial Markets as the private-sector group to provide the PWG with industry recommendations on credit rating matters. The task force is also working with credit rating agencies, with the goal of developing jointly agreed-upon recommendations this summer.

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The Securities Industry and Financial Markets Association brings together the shared interests of more than 650 securities firms, banks and asset managers. SIFMA's mission is to promote policies and practices that work to expand and perfect markets, foster the development of new products and services and create efficiencies for member firms, while preserving and enhancing the public's trust and confidence in the markets and the industry. SIFMA works to represent its members' interests locally and globally. It has offices in New York, Washington D.C., and London and its associated firm, the Asia Securities Industry and Financial Markets Association, is based in Hong Kong.


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