ISLAMABAD: The Securities Exchange Commission of Pakistan (SECP) has introduced amendments in the Credit Rating Companies Regulations, 2016 to provide more conducive regulatory environment to Credit Rating Companies (CRCs).
The amendments have been designed while considering the dynamics of local industry and international best practices, a statement said on Friday. The changes in the regulatory framework aim to provide ease of doing business and promote rating business without compromising quality of ratings.
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.
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, the statement added.
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 has also been 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 license 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 percent of shareholding of CRC.
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.