MANU/SCRR/0003/2022

Ministry : Securities and Exchange Board of India

Department/Board : Department of Debt and Hybrid Securities

Circular No. : SEBI/HO/DDHS/DDHS-RACPOD2/P/CIR/2022/121

Date : 21.09.2022

Notification/ Circulars Referred : CIR/MIRSD/4/2011 dated June 15, 2011 MANU/SSMD/0020/2011;SEBI/HO/MIRSD/MIRSD_CRADT/P/CIR/ 2021/594 dated July 16, 2021 MANU/SSMD/0027/2021;Circular SEBI/ MIRSD/CRA/Cir-01/ 2010 dated January 06, 2010 MANU/SSMD/0003/2010

Citing Reference:
CIR/MIRSD/4/2011 dated June 15, 2011 MANU/SSMD/0020/2011  Referred

SEBI/HO/MIRSD/MIRSD_CRADT/P/CIR/ 2021/594 dated July 16, 2021 MANU/SSMD/0027/2021  Referred

Circular SEBI/ MIRSD/CRA/Cir-01/ 2010 dated January 06, 2010 MANU/SSMD/0003/2010  Referred

To

All Credit Rating Agencies (CRAs) registered with SEBI

Dear Sir/ Madam,

Firewall between Credit Rating Agencies and their Affiliates

I. SEBI (Credit Rating Agencies) Regulations, 1999 ("CRA Regulations") provide for a principle-based regulation of Credit Rating Agencies (CRAs) focusing inter alia on prevention of conflict of interests. Regulation 13 of the CRA Regulations require CRAs to abide by the Code of Conduct contained in the Third Schedule.

II. Further, CRA Regulations inter alia required CRAs to segregate certain activities to a separate entity under Regulation 9(f) of CRA Regulations (hereinafter referred to as "non-rating associate or subsidiary or group entity" or collectively as "non-rating entities").

III. In view of the above, the following measures are mandated to strengthen the firewall between SEBI-registered CRAs and their non-rating entities:

A. CRAs shall formulate a policy on separation or firewall practices with the non-rating entities and document the same in their internal operational manuals or governing document. Such policy, and revi........