Research On The Legal Regulation Of Credit Rating Industry's Conflict Of Interest

Credit rating industry's provides independent third-party opinions, expressed in simplified symbols, on the credit circumstances of fixed-income financial instruments and their issuers'.Credit rating agencies are important information intermediaries in debt market. They have great influence on capital floating and financial regulating through issuing credit ratings demanded by both investors and issuers.After the financial crisis of 2008, credit rating industry has been received a lot of critiques for its undue behavior in rating structured-financial derivatives. And the conflict of interest existing in the industry is believed to be the most important reason for the industry's wrong-dong in the crisis and will be the main obstacle for its future development.Current discussing focus on two kinds of conflict of interest : the issuer-pay model and the new consulting business, some also pay attention to the corporate governing problem in the credit rating industry. This dissertation argues that the most serious and deepest reason for conflict of interest is the conflict between the credit agencies'public role and private status, which cause different pursue of value.This thesis proceeds in four chapters:The first one discusses the basis theory of credit rating industry, which include the relevant concepts, primary economics theories and the differences among credit rating industry and other similar industries, which also illustrated the industry's private status and value pursuit.The second chapter introduces the history of credit rating industry, especially focus on the influence of regulating policies towards the industry's expected role as quasi-regulators, which asked the rating agencies put public interest in the first place. The third chapter analysis how those two different value cause the most serious conflict of interest, and discusses the appearance and possible regulating measures of this and other three kinds of conflict of interest, which are the operating model, the different type of businesses and the corporate governing of the industry.The last chapter illustrates the histories, current situations and problems of the credit rating industry's in our country, reasons the necessity of developing strong native credit rating industry, and give some suggestions on how to build it.And the conclusion describes the framework and most important arguments in this paper.