Entire Section

  • COB 8.7 COB 8.7 Transparency and disclosure

    • Policies and procedures

      • COB 8.7.1 COB 8.7.1

        (1) A Credit Rating Agency must, subject to (2), have adequate policies, procedures and controls to ensure that it discloses in a timely manner:
        (a) its Credit Ratings and any updates thereof;
        (b) its policies for distributing Credit Ratings and updates thereof;
        (c) the methodologies and models used and key assumptions made in preparing its Credit Ratings and any updates thereof; and
        (d) any other significant element relating to (a), (b) or (c) above.
        (2) A Credit Rating Agency is not required to disclose information where the information is subject to confidentiality requirements.
        [Added] DFSA RM97/2012 (Made 24th July 2012) [VER20/07-12]

        • COB 8.7.1 Guidance

          1. The level of detail required in the disclosure of information concerning methodologies, models and key assumptions should be such as to give adequate information to the users of Credit Ratings to enable them to perform their own due diligence when assessing whether, or to what extent, reliance can be placed on those Credit Ratings (see COB Rule 8.8.1). Disclosure of information must not, however, reveal confidential information of, or relating to, the Rating Subject or its Group pursuant to COB Rule 8.9.1.
          2. The information referred to in Guidance No. 1 should generally include the meaning of each rating category and the definition of default or recovery, and the time horizon the Credit Rating Agency used when making a Credit Rating.
          3. A Credit Rating Agency should adequately and clearly disclose applicable risks which may affect a Credit Rating, including a sensitivity analysis of the relevant assumptions and an explanation of how various market developments affect the parameters built into the methodologies and models and may influence or impinge on the Credit Rating (for example volatility).
          4. If the nature of a Credit Rating or other circumstances make a historical default rate inappropriate or otherwise likely to mislead investors, the Credit Rating Agency should provide appropriate clarifications.
          5. A Credit Rating Agency should provide information to assist users of its Credit Ratings to develop a greater understanding of what a Credit Rating is, and the limitations on the use of Credit Ratings with respect to the particular type of financial product that the Credit Rating Agency rates. A Credit Rating Agency should clearly indicate the attributes and limitations of each Credit Rating, and the limits to which the firm verifies information provided to it by the Rating Subject, its Related Party or any external source.
          [Added] DFSA RM97/2012 (Made 24th July 2012) [VER20/07-12]

    • Communication of information

      • COB 8.7.2 COB 8.7.2

        A Credit Rating Agency must ensure that its communications relating to its Credit Ratings, Credit Rating Activities and its other business are clear, fair and not misleading.

        [Added] DFSA RM97/2012 (Made 24th July 2012) [VER20/07-12]

        • COB 8.7.2 Guidance

          1. A Credit Rating Agency should, taking into account the nature, scale and complexity of its operations, have a function within its organisation charged with the responsibility for communicating with market participants and the public on questions, concerns or complaints it receives.
          2. The objective of this function should be to help ensure that the Credit Rating Agency's officers and management are informed of those issues that such officers and management would reasonably need to be informed about when setting and implementing the Credit Rating Agency's systems and controls.
          [Added] DFSA RM97/2012 (Made 24th July 2012) [VER20/07-12]