Canadian securities administrators look at role of credit rating agencies in ABCP market

The Canadian Securities Administrators (CSA) posted a consultation paper on Oct. 6 that suggests the implementation of a regulatory framework for credit rating agencies, based on the recent controversy surrounding the asset-backed commercial paper (ABCP) market.
The proposed regime “would require compliance with the recently amended code of conduct established by the International Organization of Securities Commissions (IOSCO),” the CSA notes in a news release.
In its consultation paper, CSA has suggested “reducing reliance on the use of credit ratings in securities legislation.”
In addition, the CSA is seeking comment on a proposal to require public disclosure of all information provided by an issuer that is used by a credit rating agency in rating an asset-backed security.
The paper examines a host of other issues related to ABCP in Canada.
“Shortly after events in international credit markets led to a seizure of the non-bank sponsored portion of the ABCP market in Canada, the CSA took a number of immediate steps, which included the formation of an ABCP working group to address securities regulatory issues stemming from the credit market turmoil,” the CSA announced. “Those issues are examined in the CSA Consultation Paper.”
The consultation paper is available on the CSA website at www.csa-acvm.ca, It will be open for public comment for 75 days.
The comment period closes Dec. 20, 2008.