The Financial Regulatory Authority (FRA) has received three bids for the only credit rating licence it is offering, just before the deadline for applications expired.
The bidders are:
- MGM, a financial and banking consulting company, in technical partnership with Infomerics Rating Company, an Indian credit rating agency.
- Beltone Capital, in technical partnership with CRIF, an Italian credit rating group.
- I-Score, in technical partnership with Standard & Poor’s, a global credit rating agency.
However, none of the bids included a credit evaluation model, which is a main requirement for applying for the licence. The FRA has given the bidders a new deadline to submit the model, which is expected to take several months.
The FRA has formed a committee to review the bids and evaluate their compliance with the criteria issued by its Board of Directors. The criteria are based on the best practices of transparency and compatibility with the FRA’s standards and guidelines.
The Authority said that the credit rating services are very important for the regulatory, governmental, and investment authorities, as they help to allocate capital efficiently to the most profitable and least risky investment opportunities. The credit rating agencies assess and rank the quality of various securities traded in the financial markets.
The FRA added that licensing a new company, in addition to the one currently licenced, will enhance the capabilities of the financial sector, increase the competition, and improve the market stability, for the benefit of all the parties involved, both institutions and individuals.
It had announced the opening of the licence application process for three months, starting from 22 August, when it issued Resolution No. 151. The resolution stipulates the conditions and procedures for obtaining a licence to practice the activity of evaluating, classifying, and ranking securities.
The investors in the markets rely on the credit ratings of the credit rating agencies to make their investment and financing decisions. Therefore, the credit rating agencies are regulated, licenced, and monitored by the competent authorities in each country, according to a legal and supervisory framework.