Securities Credit Rating Legal System Study

The securities credit rating is regarded as "the economic crutch" to reduce the informational dissymmetry and systematic insecurity. Thus, its influence on the stock market is undoubted. In recent years, however, a succession of securities credit rating scandal has undermined the equity and reputation of its profession. Against this background, it is put on the agenda of world securities legislation to perfect the vocational system. This should be an even more urgent task for Chinese securities credit rating vocation as well as the stock market, which has only emerged and developed in recent times.Chinese social credit system is still not perfect, and securities credit rating practices has gone far away in front of the legal system. Because of securities credit rating legal system is lagging behind, the securities credit rating of industry greatly constrained. So I build a legal system in our country securities credit rating and make more in-depth study of securities credit rating of the legal system related issues.This paper's main body is composed of five chapters, aside from introduction and conclusion.The first chapter gives a general description of the securities credit rating as a vocation, covering its definition, characteristics, classes, the comparison of the securities credit rating and the relevant theories as well as the basic conception of the securities credit rating.The second chapter explores the securities credit rating market access system. Firstly, it analyses the characteristics, standards and legislation improvement of American NRSRO and the authorized standard to the securities credit rating of various countries. Moreover, it points out the obstacles of the securities credit rating and the eliminating measures American has taken. Secondly the author of this paper closely explores the problems and status quo of Chinese securities credit rating. Finally, based on the comparison of the status quo of the securities credit rating of various countries, I propose a series of suggestions about Chinese securities credit rating system, including setting up a unitive supervision institution, establishing an authorized securities credit rating system, upbuilding a rigid authorized qualification standard for the businessmen. The author thinks that it needs to create a strict access system for registered securities credit rating as well as a long-term evaluation system.In the third chapter, the author focuses on the specification for business of the securities credit rating. Firstly, it explores the influences of the charge and the transmission of securities credit rating on the equity of the securities credit rating institution. Secondly, the author has introduced the way to address the conflict of interest(quoted from Rating Agencies and the Use of Credit Rating under the Federal Securities Law), the Standard on the Securities Credit Rating of IOSCO and the Code of Standard Practices for Participants in the Credit Rating Process. Finally, on the basis of the fore parts, the following part starts on the conflict of interest and the information organization. Referring to the securities credit rating system of various countries and on the ground of China national conditions, it explains the detailed measures of the establishment of "the firewall" system, "the information exposure system" and "the closed-door system of information secrecy" to guarantee the sound development of the securities credit rating market.The forth chapter is about the supervision system of the securities credit rating. The part analyses the necessity of supervising the securities credit rating, including the analysis of its purpose, the function of promoting the steady and equal development of the rating industry, the prevention and control of the market security. Based on its own characteristics, the rating institution belongs to the financial service institution. Its operation is closely connected with the nation's security. Thus, the supervision is necessary. By analyzing the representative supervision models, the American and European model, the passage proposes a juristic upbuilding access for Chinese supervision model. Though the system is different by virtue of the divergence of the national condition and historical tradition, its basic theory is the same substantially. The author thinks that it is necessary to readjust the current law and regulation for the securities credit rating and set up a unitive one. Meanwhile, it is also essential to establish a specialized supervision institution and clarify its duty. Besides, to set up an industrial association and practice the way of self-management as a complementarity for the government supervision is indispensable.The fifth chapter is about the legal liability of the securities credit rating. It clarifies the related regulations on the securities credit rating. The present rules impose on securities credit rating civil responsibility for the third party seeing that China's law does not state precisely or fully regard this, which fails to protect investors with efficiency. With the reference of the American securities credit rating civil responsibility, the author focuses on its civil responsibility for the third party. In the author's opinion, the civil responsibility varies due to the difference of the party: if the victim is the stock issuer, he shall be held responsible for liability for breach of contract and tort liability; however, if the victim is the investor, the rating institution should be responsible for tort liability. For the civil responsibility for the securities credit rating, the author believes that it should take the following four matters into consideration: the behavior of breaking the law, the fact of doing damage, the subjective wrong doing and cause-effect relation. Detailed analysis is done in the part.