NEW YORK – Ratings agency Standard & Poor’s (S&P) has announced plans to reform its credit ratings process, providing improved strength, transparency, and independence.
Credit rating agencies (CRAs) have been at the centre of increased market and regulatory pressure as their mark-to-market ratings were subject to damaging fluctuations due to the subprime crisis and following credit crunch.
S&P aims to address the challenges facing rating agencies through reform of its governance policies, and the analysis and development of credit rating models. It plans to do this in addition to efforts towards improving education and information to increase transparency, market understanding and, ultimately, investor confidence.
“The ongoing transformation of the financial markets requires us to continue to bring more innovative thinking, greater resources, and improved analytics to the ratings process,” says Deven Sharma, president of S&P.
“By further enhancing independence, strengthening the ratings process, and increasing transparency, the actions we are taking will serve the public interest by building greater confidence in credit ratings and supporting the efficient operation of the global credit markets,” said Sharma.