HKMA finalises policy on ECAIs for Basel II

The Hong Kong Monetary Authority (HKMA) has released its policy paper on the recognition of External Credit Assessment Institutions (ECAIs). The HKMA has assessed a number of ECAIs that may be recognised for the standardised approach for the calculation of credit risk under Basel II.

Fitch Ratings, Moody’s, Standard & Poor’s and Rating and Investment Information are among the ECAIs in the assessed list, which can be used by financial institutions to assign risk weights for exposures to sovereigns, banks and securities firms. Unsolicited and solicited ratings will receive equal treatment under HKMA capital rules.

Under the guidelines, authorised institutions that intend to adopt the standardised approach may now begin to nominate ECAIs, provided they alert the HKMA of their

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