SEC stops “race to the bottom” on ratings

Author: | Published: 1 Feb 2009

The SEC Chairman Christopher Cox is back for more transparency in the market – this time with ratings agencies. The proposed rules should prevent agencies from trying to win business by giving better ratings.

In a speech in front of the SEC last week Cox proposed changes to Rules 17g-2 and 17g-5 that would force ratings agencies (Nationally Recognised Statistical Rating Organisations in the US) and arrangers that hire them to disclose more information to the market.

The 17g-5 change requires arrangers to provide...