Japan Panel OKs Regulatory System for Rating Firms

Tokyo, Nov. 19 (Jiji Press)--A Japanese government panel on
Wednesday approved the introduction of a regulatory framework for credit rating agencies.

The Financial Services Agency will submit a bill to introduce the
new framework to next year's regular parliamentary session starting in
January. Under the system, rating agencies will be registered with the
government, and be subject to inspections and supervision by the FSA.
The move follows growing criticism that the optimistic ratings
given to complex securitized products by rating agencies have helped
aggravate the ongoing global financial crisis.
The Group of 20 industrialized and developing economies at their
summit last weekend agreed to introduce such registration systems as a
medium-term measure to prevent a financial crisis.
The United States already has a registration system, and the
European Union is set to follow suit.
At Wednesday's meeting, members of the Financial System Council
agreed on the need to ensure rating firms' transparency.
Specifically, rating agencies will be required to disclose their
rating policies and business reports.
The panel will hold further discussions to clarify prohibited acts
by rating agencies and work out specifics about administrative penalties
against wrongdoing.
The panel will formulate a report on the new regulatory framework
by the end of this year.
The panel also agreed to streamline regulations as part of measures
to help promote mutual listings of financial products between stock and
commodity exchanges.
The government plans to submit bills to revise existing laws to the
coming ordinary parliamentary session in order to realize the envisioned
overhaul.