ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has softened regulatory regime for credit rating companies through amendments in the Credit Rating Companies Regulations, 2016.
A statement issued on Friday, the SEPC said that Credit Rating Agencies (CRAs) play vital role in development of financial markets and conduct independent, professional and impartial assessment of the credit risk associated with a particular instrument or a corporate entity.
The Securities Exchange Commission of Pakistan, to provide more conducive regulatory environment to Credit Rating Companies (CRCs) has introduced amendments in the Credit Rating Companies Regulations, 2016.
The amendments have been designed while considering the dynamics of local industry and international best practices. The changes in regulatory framework aim at providing ease of doing business and promoting rating business without compromising quality of ratings.
To provide the ease of doing business and reduce cost of business, the SECP has abolished the requirements for disengagement period of two years for private ratings, submission of annual accounts of associated concerns and obtaining documents relating to default status of associated concern.
In addition, the requirements for submission of industry specific studies, additional copies of application, submission of updated resume, and dissemination of the financial statements of CRCs on their website also removed. In order to reduce cost of doing business, the SECP has waived fee to be paid at the time of permission and renewal of license. Further, the fee at the time of grant of licnese has been reduced from Rs1,000,000 to Rs100,000 only.
To encourage new professional entrants with extensive research experience, individuals have been allowed to hold 40% of shareholding of Credit Rating Company.
To ensure that CRCs focus on their core function, CRCs have been allowed to outsource their internal audit and compliance functions to independent chartered accountants firms.
The regulations would result in reducing regulatory burden on CRCs with special emphasis upon building structural strength leading to enhancing the credibility of processes and procedure associated with the credit rating.