SEBI Coordinates Industry Classification For Credit Rating Agencies

SEBI has standardized industry classifications for credit rating agencies

To bring uniformity, the capital market regulator Securities and Exchange Board of India (SEBI) on Friday issued a standard framework for industry classification, which will be used by credit rating agencies (CRAs) for the purpose of rating implementation and research activities.

The industry classification will apply to the CRA effective Oct. 1, 2022, the regulator said in a circular.

Meanwhile, any feedback and changes proposed by the CRA should be recalibrated by the exchange, wherever possible, he added.

The standard framework will help create uniformity in the classification applied across sectors and in the securities market.

After reviewing the existing industry classification structure across sectors, the Market Data Advisory Committee (MDAC), a standing committee formed by SEBI, developed a coordinated four -level industry classification framework for adoption by all stakeholders and for all related processes or purposes. in India. securities market.

The committee consists of representatives from stock exchanges, depositories and other market participants.

Below, regulators have categorized industries based on macroeconomic indicators, sectors, industries and basic industries.

Regulators have asked CRAs to use this standard industry classification for the purpose of rating training, peer benchmarking, research activities including research for economies, industries and companies etc.

In a separate circular, SEBI has extended the deadline until 30 June 2022 for CRAs to adjust their valuation scale.

Earlier, they were required to comply with the rules by March 31.

Below, rating agencies are required to align their rating scales with the scales set under the guidelines of their respective regulators or financial sector authorities in terms of the CRA Rules, or if none are the same, follow the rating scales set by SEBI.

The move aims to standardize the use of rating scales.

In cases where the rating scale is not set by the regulator or financial sector authorities, the CRA will only use the rating scale set by SEBI from time to time.

(This story has not been edited by NDTV staff and is automatically generated from a syndicated feed.)


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