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The Governance of Credit Rating Agencies

Regulatory Regimes and Liability Issues

Andrea Miglionico

The global crisis revealed that credit rating agencies (CRAs) are capable of bringing about potential distortions in the financial sector, thereby resulting in a reduction in market confidence which, in turn, influences negotiations and expectations. CRAs need to be held accountable for lack of transparency and inaccurate ratings, however the existing regulatory framework does not secure adequate investor protection. This book provides a new and important contribution to research in the area, at a crucial time in the debate around financial regulation and investment regimes.
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ABBREVIATIONS

Andrea Miglionico

ABS

Asset-Backed Securities

AFME

Association for Financial Markets in Europe

AFSL

Australian Financial Services License

AIFM

Alternative Investment Fund Manager

ASIC

Australian Securities and Investments Commission

BBC

British Broadcasting Corporation

BCBS

Basel Committee on Banking Supervision

BCOB

Basel Committee Oversight Body

BIS

Bank for International Settlements

BoE

Bank of England

CAD

Capital Adequacy Directive

CCC

Central Counterparty Clearing

CCRs

Central Credit Registers

CDOs

Collateralized Debt Obligations

CDS

Credit Default Swap

CEBS

Committee of European Banking Supervisors

CESR

Committee of European Securities Regulators

CFSDs

Central Financial Statements Databases

CGFS

Committee on the Global Financial System

CPDO

Constant Proportion Debt Obligation

CRAAC

Credit Rating Agency Assessment Centre

CRAs

Credit Rating Agencies

CRD

Capital Requirements Directive

DOJ

US Department of Justice

EBA

European Banking Authority

EC

European Commission

ECAIs

External Credit Assessment Institutions

ECB

European Central Bank

ECGI

European Corporate Governance Institute

ECOFIN

Economic and Financial Affairs Council

ECON

Committee on Economic and Monetary Affairs

EFSF

European Financial Stability Facility

EFSM

European Financial Stabilisation Mechanism

EIOPA

European Insurance and Occupational Pensions Authority

ESAs

European Supervisory Authorities

ESM

European Stability Mechanism

ESMA

European Securities and Markets Authority

ESME

European Securities Markets Expert Group

ESRB

European Systemic Risk Board

EU

European Union

FD

Fair Disclosure

FDIC

Federal Deposit Insurance Corporation

FDICIA

Federal Deposit Insurance Corporation Improvement Act

FCA

Financial Conduct Authority

Fed

Federal Reserve System

FSA

Financial Services Authority

FSB

Financial Stability Board

FSC

Financial Stability Committee

FSCS

Financial Services Compensation Scheme

FSF

Financial Stability Forum

FT

Financial Times

G-7

Group of Seven

G-20

Group of Twenty

G-SIFI

Globally Systematically Important Financial Institution

IASB

International Accounting Standards Board

IASC

International Accounting Standards Committee

ICAAP

Internal Capital Adequacy Assessment Process

IFI

International Financial Institution

IFRS

International Financial Reporting Standards

IMF

International Monetary Fund

IOSCO

International Organization of Securities Commissions

IRB

Internal Rating Based

LOLR

Lender of Last Resort

LTCM

Long Term Capital Management

MAD

Market Abuse Directive

MBS

Mortgage-Backed Security

MiFID

Markets in Financial Instruments Directive

MSRs

Mortgage Servicing Rights

NAISC

US National Association of Insurance Commissioners

NBER

National Bureau of Economic Research

NCBs

National Central Banks

NRSRO

Nationally Recognized Statistical Rating Organization

OAS

Option Adjusted Spread

OECD

Organization for Economic Cooperation and Development

OTC

Over-The-Counter

PRA

Prudential Regulation Authority

RACs

Rating Agency Confirmations

RMBS

Residential Mortgage-Backed Securities

S&P’s

Standard & Poor’s

SEC

Securities and Exchange Commission

SIFI

Systematically Important Financial Institution

SIFMA

Securities Industry and Financial Markets Association

SIVs

Structured Investment Vehicles

SLS

Special Liquidity Scheme

SMEs

Small and Medium-Sized Enterprises

SOPs

Standard Operating Procedures

SPV

Special Purpose Vehicle

SREP

Supervisory Review Process

SRR

Special Resolution Regime

TALF

Term Asset-Backed Securities Loan Facility

UK

United Kingdom

US

United States

VAR

Value at Risk

WB

World Bank

WG

Working Group