In a new Report, IOSCO detailed the benefits of establishing "supervisory colleges" for internationally active credit rating agencies ("CRAs").
In Supervisory Colleges for Credit Rating Agencies, IOSCO stated that "the dispersion of internationally active CRA affiliates worldwide presents a challenge to supervisors" because it provides them with only a limited perspective on activities of the CRAs in their jurisdictions. To address this issue, IOSCO recommends developing a "college of regulators" to operate as a forum for exchanging information about internationally active CRAs and to promote "cooperation in order to enhance risk assessment ... and to support effective supervision of such CRAs." IOSCO noted that a "CRA college was viewed as being less likely to raise legal or regulatory issues among the various IOSCO jurisdictions" than other types of bodies.
The potential benefits, as outlined in the report, include:
- improved quality of supervision resulting from the broader information base that could be available through more routine information exchanges;
- improved ability to assess the risks of a particular CRA;
- fostering of the pursuit of common regulatory objectives; and
- operational efficiencies.
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