BEST PRACTICES COMMITTEE

Best Practice Committee plans for, organize and direct the conduct of Best Practices Dialogues in which ACRAA CEOs are expected to be in attendance and in which other participants (e.g. regulators, finance market players, government representatives, etc.) may be invited to discuss topics which examine and promote best practices in the credit rating process and in the general conduct of the credit rating business.

Code of Ethics

To be followed by concerned individuals

Adopted during the ACRAA Membership Meeting on 25 October 2002

Individuals involved with the credit rating process at member agencies shall agree to and abide by the following :
1. Credit Rating is a function of serious responsibility and any and all persons exercising the function shall view it as a matter of great trust.
2. Members of credit rating boards / rating committees and any staff member participating in any way in the credit rating decision making, shall always apply to the credit rating process the highest degree of integrity, competence, objectivity and thoroughness, worthy of the trust the function requires.
3. Although Credit Rating is a matter of opinion, it shall be reached through a formal and professional process, which is supported by appropriate objective criteria and based on information considered adequate and reliable by the rating agency.
4. The credit rating agency and its staff shall presume the confidentiality of the information received by it in the course of the credit rating process, and take all possible precautions towards this end.
5. In case of any possible conflict of interest situation, the member of the credit rating board / rating committee or the staff member concerned shall disclose such conflict of interest and shall not participate in any manner in formulating or arriving at a rating. (Nevertheless, the person with a conflict of interest may be asked to be a resource person to give information or opinions useful for the consideration of others, but such person shall not participate in the voting process itself).


Code of Ethics

To be followed by Rating Agencies

Adopted during the ACRAA Membership Meeting on 25 October 2002

Member Credit Rating Agencies shall put in place systems and procedures to ensure the following :
1. The proceedings of a credit rating board / rating committee, are kept confidential at all times, and not revealed to any external parties or agencies. If any records of the proceedings are made, credit rating agencies must take steps to keep such records properly safeguarded, except where required to be disclosed by the provisions of laws or regulations.
2. When the credit rating board decides on a rating, it shall be announced as a joint decision and the individual votes shall be kept confidential, even if recorded. This requirement of confidentiality shall apply to rating board members for their own votes as well.
3. When and after a credit rating board / rating committee member or credit rating agency employee terminates his/her employment or work association with the rating agency, the requirement of confidentiality with respect to the information received during the period of work association shall continue as information held in trust.
4. A credit rating board / rating committee member does not take undue material advantage of any confidential information received through his or her participation in a credit rating process. Persons involved in the ratings process should also be made vigilant to prevent abuse of prior knowledge of ratings changes.

QUALITY AND INTEGRITY OF THE RATINGS PROCESS

1Specification and description of Rating Process and Criteria.
We have clearly specified and publicly available process and criteria for arriving at a rating
Our process and criteria are under preparation / available but not published
(Different statement, drafted by the agency)
Process and criteria not defined
2Published and explicit Ratings Review / Appeal Process
We have a structured review and appeal process
We have a process of review but not of appeal
(Different statement, drafted by the agency)
We do not have a process of review or appeal
3Policy on Rating Withdrawals
All assigned ratings are kept alive through their term
Ratings are withdrawn (suspended) only in extreme cases of information unavailability. In such cases the last date that the rating was updated and the fact that the rating is currently withdrawn is published in public domain
Ratings are withdrawn in cases of issuer non-cooperation
(Different statement, drafted by the agency)
4Policy on Disclosure of unaccepted ratings
We do not reveal unaccepted ratings under any circumstances
We reveal unaccepted ratings only to regulatory agencies
(Different statement, drafted by the agency)
5Policy on surveillance
Our rating surveillance is normally done _times a year
(Different statement, drafted by the agency)
We have no fixed policy on rating surveillance
6Policy on code of ethics of ratings agency and its staff
We have an explicit code of ethics signed and adopted by each member of the agency. The code of ethics is also available in public domain.
An explicit code of ethics exists and our employees are expected to follow it.
(Different statement, drafted by the agency)
We do not have a published code of ethics
7Validity of ratings
Our ratings are valid for the life of instrument or till withdrawn or changed. This fact is externally communicated.
(Different statement, drafted by the agency)
We have no clear statement of validity of ratings
8Publication on the Limitations of 1.Rating Rigour 2. formation adequacy 3.Currency
We have a published document stating the limitations of our rating process
We do not have a published document stating the limitations of our rating process
9Assurance or guarantee of ratings
We do not, either implicitly or explicitly, give any assurance or guarantee of a particular rating prior to a rating assessment. This policy, however, does not preclude us from developing prospecting assessments used in structured finance andsimilar transactions.
(Different statement, drafted by the agency)
10Policy on Compliance Officer
We have policies and procedures that specify the role of a compliance officer and the officer's reporting lines andcompensation. Policies have also been instituted that encourage employees to report activities illegal, unethical, or in any way contrary to the CRA's code of conduct to the Compliance Officer.
We do not have a separate compliance officer or policy for reporting activities that are contrary to the CRA' code of conduct
(Different statement, drafted by the agency)
11Separation of analyst compensation and revenue from issuer
The compensation of individual analysts is not based on the amount of revenue that the CRA derives from the issuers that the analysts rate or with whom the analysts regularly interacts.
We have no policy on separation of analyst compensation and issuer revenue
(Different statement, drafted by the agency)

CRA INDEPENDENCE AND AVOIDANCE OF CONFLICT OF INTEREST

1Published Policy on dependence on third parties: 1. Auditors 2. Trustees 3. Consultants 4. Experts
All information provided is taken at face value, we do not carry out any independent verification
Independent verification of information is carried out to the extent possible
(Different statement, drafted by the agency)
No policy on this issue
2Disclosure of Interests
For all rating assignments any conflict of interest that may exist at the organizational level is disclosed at the time of therating
(Different statement, drafted by the agency)
3Separation of businesses
We have legally and operationally separated our credit rating business and analysts from any other business that may have a potential for conflict of interest.
We have separated operationally but not legally our credit rating business and analysts from any other business that may have a potential for conflict of interest.
We have no separation of businesses
(Different statement, drafted by the agency)
4Disclosure of general nature of fee arrangements with rated entities
We disclose the general nature of fee arrangements with rated entities
We do not have any disclosure of the general nature of fees arrangements with rated entities
(Different statement, drafted by the agency)
5Disclosure of non-rating revenues from rated entities
We disclose non-rating fees as a proportion of total fees received from each rated entity
We do not disclose non-rating fees as a proportion of total fees received from each rated entity
(Different statement, drafted by the agency)
6Trading Policy for CRA employees
We maintain a trading policy for all our employees, which, amongst other things, prohibit employees from transacting in securities when they possess confidential information concerning the issuer.
We do not have any such trading policy.
(Different statement, drafted by the agency)
7Policy on employees directly involved in the rating process initiating, or participating in, discussions regarding fees or payments with the rated entity.
We have an explicit policy regarding exclusion of rating analysts from business development activities.
We do not have any such policy.
(Different statement, drafted by the agency)

CRA RESPONSIBILITIES TO THE INVESTING PUBLIC, ISSUERS, AND REGULATORS

1The Ownership of the agency
A clear and comprehensive account of the ownership has been circulated in the public domain, and is updated whenever there are significant changes in the ownership
(Different statement, drafted by the agency)
No such account has been circulated
2The agency's Management and Board Structure
Details (age, qualifications, experience, other directorships) of the key Senior Management, and all Board Members, have been published, and are available in the public domain.
(Different statement, drafted by the agency)
Details of Management and Board Structure not published
3Constitution of the Rating Committee
Names and Details (age, qualifications, experience, and other directorships) of the Rating Committee members, including backgrounds and qualifications, have been published, and are available in the public domain.
(Different statement, drafted by the agency)
Rating Committee details not published
4Disclosure of what Ratings issued by the agency mean
Our ratings indicate the Probability of default of the rated instrument
Our ratings indicate Loss given default of the rated instrument
(Different statement, drafted by the agency)
5Policy on time to communicate ratings
We publicly release our ratings within days of their being assigned and / or accepted. This is known up-front to the parties involved in the process
(Different statement, drafted by the agency)
No explicit policy on timely communication
6Guidelines on Rating Rationale: timeliness
Our rationales are published within _days of the rating being assigned / accepted
(Different statement, drafted by the agency)
We have no explicit policy on the timeliness of our rating rationales
7Guidelines on Rating Rationale: content
Our rationales include factors taken into account in arriving at the rating, basic financial and operating information (restricted in case of unlisted companies), market position and business outlook
(Different statement, drafted by the agency)
We have no explicit guidelines on what our rationales should contain
8Publication of Default and Transition statistics (Normally default and transition statistics are compiled for ratings data over a 10-year history and with a large population of outstanding ratings)
Our default and transition statistics are compiled and disseminated regularly
Our default and transition statistics are compiled for internal analysis but not disseminated
(Different statement, drafted by the agency)
We do not compile default and transition statistics
9Existence and publication of a Policy on Unsolicited Ratings: whether they will be undertaken, if so based on what information.
We have a publicly available and communicated policy on unsolicited ratings
We have a policy applied internally, but not externally communicated
(Different statement, drafted by the agency)
No explicit policy on unsolicited ratings
10Policy on preserving confidentiality of privileged information (and exceptions for regulatory queries)
We do not reveal confidential information obtained during the rating exercise to anyone under any circumstances
We reveal confidential information obtained during the rating exercise only to regulatory agencies
(Different statement, drafted by the agency)
We do not have a policy on preserving confidentiality of information

DISCLOSURE OF THE CODE OF CONDUCT AND COMMUNICATION WITH MARKET PARTICIPANTS

1Publication of the CRA code of conduct
We publicly disclose our code of conduct, and describe how the provisions of our code of conduct fully implement the provisions of the IOSCO code. We also explain deviations, if any, from the IOSCO code and how in spite of these deviations we achieve the objectives contained in the IOSCO provisions.
We have a code of conduct, but do not publish it in the public domain
We do not have a code of conduct
(Different statement, drafted by the agency)
2Existence of a dedicated function/group within the organization charged with informing market participants and public regarding any questions, concerns, or complaints that the CRA may receive.
We have a dedicated function/group with our organization that takes care of the above function
We do not have such a group
(Different statement, drafted by the agency)