Round table: Rating agencies as indicator of financial market. Role of ratings and rating agencies in post-crises world.
22.07.2010July 22, 2010, 10.00 a Round table ‘Rating agencies as indicator of financial market. Role of rating and rating agencies in post-crises world’ was held at the press centre of the information Agency Ukrainian news.
Organizers of the event were Investors Relations Agency and information Agency Ukrainian news.
The actual rating system still remains to be a system of risks evaluation to the investment community. Nevertheless, the world-accepted rating system, in particular – procedure of rating assignment and its public disclosure, procedure of its withdrawal – all these require reconsideration and refinement. Moreover, rating practice in Ukraine, including rating procedures, rating agencies’ activity, and methodology of credit rating assignment is far lagging behind the European standards.The key problem lies in imperfections within the state level –non-transparency of enterprises activities, corruption schemes, applied pressure methods, rating sector monopolization, and which is the most significant –absence of regulatory toolkit as for the rating agencies operating, as well as for methodology of objective rating assignment.
According to the Agency opinion, which had participated in the Round table, the given meeting was held in the very right time – necessity of the discussion has been identified long ago already. The Round Table had gathered representatives of such Ukrainian institutions as The State Commission for securities and stock market, The State Commission for Regulation of Financial Services Markets of Ukraine, RA ‘Credit Rating’, The League of insurance organizations of Ukraine, Ukrainian association of investment business etc.
All in all, the following questions were enlightened in the process of the discussion:
1. General attitude to the Ukrainian rating agencies
2. Models of integration of rating agencies to the economic system of Ukraine, their benefits and vices
- Administrative model, calling for state regulation and obligatory rating of issuers
- Voluntary model – envisages that rating agencies should gain trustworthy reputation year after year and thus major part of investors could chose on their own which rating agencies and rating assessments are to be trusted while decision making in investing. The given model would promote healthy competitiveness of Ukrainian rating agencies’ activity
3. Rating agencies’ responsibility level as for results of decisions, adopted on the basis of assigned ratings
4. International practice of state regulation of rating agencies’ operations
5. Law economic culture of consumers of rating assessments, which is insufficient for their effective application
6. Rating scale elaboration problems, provoking risks of information distortion
7. Impossibility of identification of statistics of the enterprises’ default with assigned ratings because of 2 reasons:
- Relatively short period of rating agencies’ existence at the Ukrainian market
- Possibility of contortion of rating interpretation, as by its core all assessments are subjective. As well as such categories as risks which are also hard to evaluate and calculate
8. Perspectives of rating evolution, assigned on the basis of corporate governance evaluation of enterprises
9. Advisability of public information using while rating assignment