The tandem of EFAMA, the ESF and the IMA responses the call of the Financial Stability Forum (FSF) on investors to address their over-reliance on ratings and to review their standards of due diligence and credit analysis when investing in structured credit products.Jointly companies publish “Asset Management Industry Guidelines to Address Over-Reliance upon Ratings”.
The paper delivers guidance for asset managers on the responsible use of ratings for securitisation, structured finance and structured credit products. The authors call to apply the lessons learned from the recent financial turmoil.
The initial impetus for the Guidelines was the “Ten Industry Initiatives to Increase Transparency in the Securitisation Market”, an industry-led initiative coordinated by the ESF and first announced in July 2008. EFAMA and the IMA subsequently prepared these Guidelines with the ESF.
The securitisation industry is very committed to enhancing credit assessment processes by structured finance investors, as a means of reducing reliance on ratings, says Rick Watson, managing director, the European Securitisation Forum. These principles are an important step in the development of maximum transparency in this industry.”
The Guidelines demonstrate the industry’s strong commitment to appropriate standards of due diligence and credit analysis, says Peter De Proft, director general, EFAMA. A sound credit analysis is an integral part of the asset manager’s obligation to act professionally and in the best interest of its clients, and over-reliance on credit ratings should be avoided.
Our members manage other people’s money and act in their clients’ best interests, says Guy Sears, director, Wholesale IMA. This means that when others rely on you, you should be able and willing to meet that expectation and not blindly follow what a CRA might say.
L.D.