Study On The Regulatory Legal System Of Securities Credit Rating

The credit rating agencies play an important role in the financial system of all countries and regions. However, the credit rating agencies have not performed its functions on transmissing the information, revealing risk and auxiliary regulation, but have become a major force to cause financial crisis or greatly magnify the destructive impact of the crisis on the global economy. Therefore, the credit rating agencies received extensive attention and have been heavily criticized. With the deepening of understanding function of credit rating agencies, various countries or economies choose to strengthen the supervision of credit rating agencies. The United States and the European Union are the representatives of developed countries or regions which have strengthen the supervision of securities credit rating as an important part of financial regulatory reform. In China, the securities credit rating industry is lagging and still lack international competitiveness. Therefore, for our country, it is undoubtedly of great practical significance to improve the development of credit rating industry, draw lessons from foreigen mature experience and strengthen the supervision of securities credit rating. After analyzing the regulatory legal system of the credit rating in the United States and European Union, the author put some recommendations to improve the regulatory legal system of secueities credit rating in China. The full text is divided into five parts:Chapter I is the theoretical basis of the dissertation. The author explores the concept of credit rating, analyzes the characteristics of the securities credit rating and its impact on different subjects, analyzes the legal property of industry Association and the credit rating agencies, the function of credit rating agencies, and analyzes legitimacy of credit rating agencies in economic theory. The author deems that credit rating agencies are public property, but they are usually market participants that are for profit. As an intermediary, credit rating agencies assume the functions that the other "gatekeepers" do not have. Government regulation and industry self-regulation are two different forms of regulation, which complement each other and regulate credit rating agencies from external and internal. Theoretical analysis of the legitimacy of the credit rating agencies further illustrates that though there are many problems, the credit rating agencies are important and indispensable in the development of financial market of all countries and regions.Chapter Ⅱ forces on credit rating regulatory evolution of the law in the United States and European Union. In this chapter, the author summarizes the history and Status quo of the securities credit rating industry in the United States. Subsequently, the chapter studies the sequence and content of the regulatory law of the United States and European Union. Additional, the chapter explains the nature characteristics and content of regulatory rules of credit rating of the International Organization of Securities Commission Organization. Finally, the chapter compares the regulatory reform of credit rating of the United States and European Union from reform motivation and path, intensity and content and discusses the controversial issues. After discussing the legislative history of credit rating of the United States and the European Union, the author deems that with the development of financial markets and the credit rating results more being widely used as a basis for regulation, credit rating agencies virtually have a public authority, which will inevitably lead to conflict on its functions. Thus, we should regulate a credit rating agency, which leads to government regulators from scratch, and gradually strengthen. Chapter III mainly forces on illustrating the development and the characteristics of domestic securities credit rating industry, the process of supervision legislation and its characteristics, the main contents of laws and regulations and its problems. Compared with the United States and European Union, domestic credit rating agencies are numerous but lacking of the accumulation of reputation capital, business has been expanded but rating performance is limited, internationalization process accelerates but competitiveness is insufficient. The regulatory legislation of domestic securities credit rating has some characteristics, which are the motive and goal closely related to the development of the capital market, laws and regulations respectively formulated by different mechanisms and mainly include normative documents and indirect regulation.The same as the United States and European Union, the credit rating agencies have been given the regulatory concessions in China. After financial crisis, China also has started to reduce reliance on rating agencies. Currently, domestic credit rating agencies system has taken shape. Nevertheless, there are still some problems, including low legal status, lack of authority, the content being simple or lack of specificity, conflicts of norms or blind, lack of integrity.Chapter IV discusses the legitimacy of the government supervision and limitations, the theoretical basis of the development of industry association in securities credit rating, and explains the characteristics of the American market-based securities credit rating management system and European Union government-based securities credit rating of the regulatory system, and the domestic securities credit rating supervisor system and its perfects. At present, Chinese "One industry and three association"-type government-based credit rating securities regulatory system has basically completed, and industry associations have taken effect in securities credit rating supervision. Research shows that, although our country and the European Union have the same government-based securities credit rating of regulatory system, the neglect of European Union to the self-discipline and the influence to the development of securities credit rating industry are worth reflection. Although the United States has market-based regulation system, in recent years, it gradually strengthens the government supervision, and thd regulations it adopts have several common grounds with European Union’s, which shows that the two kinds of regulation system are not definitely deferent, but merely varies on highlights. In addition, the marketing operation model of the United States credit rating industry association also has great reference value. Based on it, the author proposed a securities credit rating supervision system which puts equal importance on both the government regulation and self-discipline, at meantime, draws its realization. The government supervision should regard the degree of market failure and regulatory failure as boundaries, adheres to the fair justice supervision, combines micro-prudent supervision and macro-prudent supervision with effective supervision principle, further perfects legal laws and regulations, and clears regulation subject, implements classification of supervision. At last, after analyzing the function of securities credit rating industry associations,the obstacles of industrial self-discipline, this paper puts forward the actual method to improve industry association organization model and promote self-discipline.Chapter V puts some sound recommendations on improving the securities credit rating system, such as, improving market access and exit system of credit rating agencies, maintaining the credit rating agency independence, clearing legal responsibility. After researching the related systems, analyzing advantages and disadvantages of increasing number of credit rating agencies from theory and practice, the author thinks that we should improve rating agencies market access and exit system by clearing authority, thinning the entry access and exit conditions and clearing application procedure. Secondly, the author analyzes the factors that affect the independence of credit rating agencies, draws on the practices of the United States and European Union, and thinks that we should maintain the independence of credit rating agencies by optimizing the payment mode, preventing conflicts of interest, enhance transparency of information disclosure and establishing a sound internal control mechanism. Thirdly, the author clarifies the legal relationship between tthe credit rating agency and the rating results users, regulators and other stakeholders. The author thinks that we should clear the liability of credit rating agencies by the establishing civil liability, administrative liability and criminal liability.