Welcome to www.spnewactions.com, a website designed to introduce the public to the broad array of new actions S&P has launched to further strengthen our ratings processes and better serve capital markets worldwide. These measures reflect our commitment to continuous improvement and are designed to strengthen and enhance governance, the quality of our analytics, market transparency and investor education and to serving the public interest by building investor confidence in credit ratings and supporting the efficient operation of credit markets around the world.
We are committed to playing a leadership role in addressing the issues currently facing the credit markets in collaboration with other market participants, regulators and experts. We invite you to review the descriptions of the actions we are taking and hope the information will help you better understand the ratings process and its role in global credit markets.
Please check back often for frequent updates.
Governance
S&P’s steps to further manage potential conflicts of interest, strengthen the ratings process, and better serve the markets
Governance: Ensuring Integrity of the Ratings Process
- Establish an Office of the Ombudsman that will address concerns related to potential conflicts of interest and analytical and governance processes that are raised by issuers, investors, employees and other market participants across Standard & Poor's Ratings Services ("S&P") businesses. The Ombudsman will have oversight over the handling of all issues, with authority to escalate all unresolved matters, as necessary, to the CEO of McGraw-Hill and the Audit Committee of the Board of Directors.
- Engage an external firm to periodically conduct an independent review of S&P Ratings' compliance and governance processes for the purpose of publicly issuing an opinion that addresses whether S&P is effectively managing potential conflicts of interest and maintaining the independence of its ratings.
- Hold periodic reviews with the Audit Committee of the McGraw-Hill Board to discuss S&P Ratings' overall governance and compliance function which will include: (1) key business measures of ratings quality and compliance effectiveness, (2) the concerns and resolution of issues addressed by the Office of the Ombudsman, and (3) results of the independent reviews, by an external firm, of S&P Ratings' governance and compliance processes.
- Formalize functions with responsibility for policy governance, compliance, criteria management and quality assurance of the ratings and make them separate and independent from the Ratings business units.
- Establish an enterprise-wide Risk Assessment Oversight Committee that operates separately and independent of the business. The Committee will assess all risks that could impact the ratings process. This committee will also assess the feasibility of rating new types of securities.
- Implement “look back” reviews to ensure the integrity of ratings, whenever an analyst leaves to work for an issuer.
- Institute periodic rotations for lead analysts.
- Increase level of existing employee training to ensure compliance with policies.
Analytics
S&P’s steps to further manage potential conflicts of interest, strengthen the ratings process, and better serve the markets
Analytics: Enhancing Quality of Ratings Analysis and Opinions
- Improve surveillance process through: (a) additional resources and ongoing separation of new rating and rating surveillance functions in Structured Finance (b) strengthen surveillance in Corporates & Governments through the expanded use of search and market based tools and through oversight of surveillance separate from the business, and (c) regular adding of surveillance tools to make the surveillance process more timely and effective.
- Establish a Model Oversight Committee within the Quantitative Analytics Group, which will be separate from and independent of the business unit, to assess and validate the quality of data and models used in our analytical processes.
- Increase annual analyst training requirements, enhance training programs and establish an analyst certification program.
- Complement traditional credit ratings analysis by highlighting non-default risk factors such as liquidity, volatility, correlation and recovery, that can influence the valuation and performance of rated securities and portfolios of these securities.
Information
Education
S&P’s steps to further manage potential conflicts of interest, strengthen the ratings process, and better serve the markets
Education: More Effectively Educating Marketplace about Credit Ratings and Rated Securities
- Publish a Credit Ratings User Manual and Investor Guidelines to promote better understanding of the ratings process and the role of ratings in the financial markets.
- Broaden distribution of analysis and opinions via web and other media.
- Launch market outreach program for S&P executives to establish relationships with CIO's. Launch another outreach program to educate the market on the complex securities that S&P rates.
- Establish an Advisory Council with membership that includes risk managers, academics and former government officials to provide guidance on addressing complex issues and establish topics for market education.
- Work with other NRSROs to promote ratings quality through the introduction of industry best practices and issuer disclosure standards.
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Archive
Below is a record of our progress in implementing the Leadership Actions.
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