Concerned over the practice of certain companies influencing rating actions, market regulator Sebi today proposed a stronger disclosure norms for credit rating agencies (CRA).
"It is recommended that all registered agencies be required to disclose publicly on their websites their shareholding pattern and the names of the owners," said a Sebi sub-group in its recommendation on which the regulator has invited comments from public.
Rating agencies, the report added, "have to manage this conflict and prevent it from influencing rating decisions. Both regulations and internal procedures have to be designed towards this end."
On disclosure of rating performance, the sub group recommended that every CRA be required to publish, every six months, a list of its publicly outstanding ratings that have moved by more than one notch over the preceding six months.
The report, which also covers other financial market intermediaries, has suggested raising the net worth eligibility criteria for asset management companies, brokers, debenture trustees.
The Committee on Review of Eligibility Norms (CORE) was constituted by SEBI to suggest the eligibility norms for market intermediaries. The public comments on the report would be accepted till June 14, 2010.
"It is observed that different sub-groups have recommended different net worth requirements for the same intermediary," SEBI said.
For merchant bankers, while one sub-group has recommended a networth of Rs 10 crore, another group said it should be Rs 5 crore.
For debenture trustees, the report recommended that the networth could be increased to Rs 2 crore, from the present Rs 1 crore.
The sub-group was of the view that the stock broker's net worth be increased to Rs 1 crore for corporate and Rs 75 lakh for other than corporate.
