The Securities and Exchange Commission (SEC) has issued a revised set of regulations for credit rating agencies, putting in place a stronger system centered on better governance, greater transparency, and improved analyst competence and independence. The updated framework follows global standards set by the International Organization of Securities Commissions, helping bring local practices in line with international best practices.
SEC Chairman Francis E. Lim noted that unlike publicly traded companies whose performance is clearly reflected in share prices, credit rating agencies operate with less direct accountability even though their assessments are paid by issuers and widely used by investors. He explained that the new rules establish the clear standards of independence, governance, and transparency that investors deserve, and that aligning local rules with global benchmarks reinforces the reliability and independence of credit ratings in the country.
The regulations now cover a broader range of financial products including corporate bonds, commercial paper, structured products, sukuk instruments, covered bonds, sustainability-linked instruments, and other debt securities. To receive accreditation, rating firms will need a minimum paid-up capital of P50 million at the time of application, rising to P70 million three years after accreditation takes effect. This higher capital requirement aims to help firms maintain steady, independent operations through all economic conditions, especially during downturns when reliable information is most crucial for sound investment decisions.
Existing agencies already accredited when the new rules take effect will have 12 months to comply with most requirements, though they will have 36 months to meet the P50 million capital requirement and 72 months to reach the P70 million level. New applicants seeking accreditation within the first 12 months will need P30 million in paid-up capital initially, following the same scheduled increases. Firms must also maintain an ownership structure that guarantees their independence and objectivity, and will need SEC approval whenever changes in direct or indirect shareholding would result in a new controlling owner.
