Panel Session: Expanding the Scope of Scrutiny

1. Panel Session:Expanding the Scope of Scrutiny Hong Kong - 30 November, 2010

2. Role of Credit Ratings in Financial Markets • To meet market needs over time, credit ratings have developed important attributes • Insight and robust analysis • Symbols that succinctly communicate opinions • Broad coverage across markets and industries, enabling comparability • Public availability of opinions • These attributes have made credit ratings the spoken and understood language of credit • A point of reference easily understood by market professionals • Promote dialogue and debate • Market commentary that helps flow of relevant information • Improve understanding of credit risk, which promotes market integrity and efficiency

3. Evolving Regulatory Landscape - Background • CRAs largely unregulated in most jurisdictions until recently • 2003 – global securities regulators endorse IOSCO Principles for CRAs • Dec 2004 – global regulators ask CRAs to voluntarily comply with IOSCO Code • 2006-2007: US adopts legislation and rules for NRSROs • May 2008: IOSCO Code revised • April ‘09: G-20 members agree to introduce supervisory frameworks for CRAs • Some G-20 members already had regulations – e.g., US, Mexico, Argentina • Since then, some G-20 members have adopted or proposed frameworks • EU – Regulation adopted; regime coming into force 2010/2011 • Australia – Licensing regime introduced 2010 • Japan - Voluntary registration regime became law in April 2010, compliance on October 1, 2010 • Canada – Regime proposed for comment 2010 • Hong Kong - July Consultation Paper by the HK SFC; awaiting results of SFC deliberations • Other G-20 members expected to introduce regulation of CRAs soon – e.g., Brazil

4. Panel Session:Expanding the Scope of Scrutiny Hong Kong - 30 November, 2010