Four authorities including the People's Bank of China ("PBC") have recently issued the Interim Measures for Administration of the Credit Rating Industry (the "Measures"), with effect from December 26, 2019.
The Measures improve the regulatory regime for credit rating business in four aspects. The first is establishing the market-based restraint mechanism. Ex-ante regulation is loosened to allow a credit rating agency to apply to the relevant department for the qualification for credit rating business after it has completed the record-filing, which helps promote the full market competition among credit rating agencies. The second is focusing attention on in-process and ex-post regulation. Efforts will be stepped up to oversee the independence and transparency of credit rating agencies, their management of conflict of interests, the standardization of rating procedures, etc. and require them to ensure adequate information disclosures, in order to make it convenient for the parties concerned in the market to compare and judge the quality of their ratings, rating techniques, staffing, practicing experience, etc. The third is refining the regulatory mode to suit management actuality. It is clearly stated that the PBC is the body primarily in charge of the credit rating industry, while the National Development and Reform Commission ("NDRC"), the Ministry of Finance ("MOF") and the China Securities Regulatory Commission ("CSRC") are business regulators and will be responsible for taking concrete regulatory measures according to law. And the fourth is clarifying the regulatory authority of each relevant department and its legal liability.