Code of Conduct
Code of Conduct
1. Quality and Integrity of the Australia Ratings Process
A. Quality of the Rating ProcessB. Monitoring and Updating
1) Analysis is completed using publicly available information and material supplied by the client. Ratings are assigned according to Australia Ratings published criteria.
2) Ratings and rating changes will be captured and reported in an historical ratings database
3) The Rating Committee oversees the consistent application of published criteria to the ratings assigned
4) Ratings will be determined by a majority vote of the Ratings Committee. A quorum shall comprise three voting members.
5) An electronic file of all ratings assigned will be maintained for any product or security rated for a period required by Australia Ratings' AFSL.
6) The rating reports issued by Australia Ratings will be reviewed by the Rating Committee to confirm the material and statements in the report are fair and reasonable and not misleading to investors.
7) Analysis and reports will be completed by appropriately qualified and skilled personnel to ensure the rating outcome is of high quality.
8) The analytical resources will be experienced in a number of asset classes to promote continuity of resource and avoid bias in rating outcomes.
9) A formal review will be put in place to periodically review the methodologies and significant changes to the methodologies and models that Australia Ratings uses.10) Ratings will be monitored and reports updated on a regular basis
- Creditworthiness will be reviewed using annual financial statements and other relevant information available to Australia Ratings.
- Ratings will be adjusted on a timely basis through the weekly Rating Committee meeting to reflect any change in the opinion of creditworthiness due to an unanticipated development.
- All new ratings and changes to outstanding ratings will be released to the public via the company’s website.
C. Integrity of the Rating Process
11) Rating changes will also be released via media releases published on the Australia Ratings’ website.
12) If a material change to a methodology or material assumption occurs, Australia Ratings will disclose the class of credit ratings that are likely to be affected by the change. It will review and modify them to reflect the change as soon as possible and in any case within six months after the change.
2. Independence and Avoidance of Conflict of Interest
13) Employees of Australia Ratings sign a quarterly certificate of their compliance with this Code of Conduct and adherence to relevant laws and regulations governing credit rating services in Australia.
14) Australia Ratings conducts business in a fair and honest manner at all times.
15) Australia Ratings uses experienced credit professionals to ensure its analysis and ratings are of a high standard. Junior resources are directed and supervised by experienced credit professionals.
16) Ratings are determined by a Rating Committee process and no ratings are “guaranteed” prior to the completion of the requisite analysis and determination by the rating committee.
17) Business will be conducted in accordance with the Australia Ratings Compliance Plan which will be reviewed periodically.
18) The Board of Australia Ratings will be instructed to receive and deal in an appropriate manner with any notification of any unethical or illegal action by an employee.
1) Rating actions are to be taken as deemed appropriate based on factual information and determination of applicable rating criteria.
2) Australian Ratings and its employees will exhibit professionalism and act in an independent and objective manner in completing analysis and determining ratings.
3) Ratings will be based on published rating methodology using publicly available information and any additional data supplied by clients.
4) Ratings assigned to counterparties, fixed income products and debt securities will not be influenced by existing or potential commercial relationships.
5) The primary business activity of Australia Ratings is the assessment of credit risk and the assignment of credit ratings to counterparties, fixed income products and debt securities.
B. Procedures and Policies
6) The activity of Australia Ratings and the engagement of analysts to complete ratings will be conducted in a manner to avoid any actual or potential conflicts of interest. The management of potential conflicts will be monitored by the Board and through relevant disclosure.
7) Australia Ratings will evaluate and monitor any actual or potential conflicts of interest at the time of client engagement and throughout the rating process. Disclosure of any conflict and the materiality of the conflict will be advised on rating reports and disclosed in a timely manner on the company’s website.
8) Where applicable Australia Ratings will disclose the general nature of its rating fees paid by issuers requesting a rating.
9) Analysts are not permitted to trade in securities or derivatives in rated entities which represent a conflict of interest.
10) Any analyst involved in liaising with Federal Government regulators will not be involved in rating assessment of the Federal Government.
C. Analyst and Employee Independence
3. Responsibilities to the Investing Public and Issuers
11) Analyst remuneration will be based on a standard remuneration contract.
12) Analysts will not be directly involved in the negotiation of fees.
13) Analysts will not be assigned to rate entities in which they have direct and personally material investment in the entity (or related entity) which could influence the determination of the rating. This does not preclude an analyst’s participation where the investment is through a diversified collective investment scheme. Further analysts are not to be assigned to rate an entity for whom they, or an immediate family member, have worked or have a significant business relationship in the last six months.
14) Analysts (or their spouse, partner or minor children) will not be permitted to invest or trade in securities or derivatives of any entity whose rating falls within the analyst’s area of responsibility.
15) Analysts will be subject to the Australia Ratings Gift and Entertainment policy which requires entertainment and gifts for a value greater than $250 to be disclosed and recorded on the Australia Ratings Gift and Entertainment register.
16) Any personal relationship with an employee of a rated entity will be disclosed to the Managing Director where the nature of the person’s role in the organisation is of significance in the rating of the organisation.
17) Australia Ratings will review the past work of analysts that leave the company and join a rated organisation that the analyst has been involved in rating, or a financial services firm which the analyst has had significant dealings as part of the analyst's duties at Australia Ratings.
A. Transparency and Timeliness of Rating Disclosure
1) Ratings will be released in a timely manner through the company’s website.
2) Australia Ratings publishes its ratings and reports via the company website.
3) The date of the last review of each rating will be disclosed on the rating and rating report.
4) All public ratings will be available via the company’s website.
5) Rating reports will describe the basis of each rating and the justification of the rating assigned.
6) Where an outstanding rating is changed the justification for the change will be laid out in the update posted to the company’s website.
7) Prior to the release of the rating an issuer will be advised of the critical information to be analysed in determining each rating and be given time to correct any factual misperceptions in order to assist a valid rating being assigned by the Rating Committee.
8) Australia Ratings will compile a historical database of its ratings and performance of the ratings. However it should be noted that a period of at least five years is expected to be needed before any useful consideration of the ratings can be made.
9) Any rating where the issuer has not initiated the rating will be disclosed as such. Australia Ratings’ policies will outline the circumstances in which an unsolicited rating will be conducted.
10) Material amendment to rating methodology and criteria will only be completed after an evaluation by the Rating Committee of the potential market impact and suitability of the new methodology.
11) Australia Ratings will not engage in anti-competitive practices that will affect the integrity and quality of the ratings.
B. Treatment of Confidential Information
4. Disclosure of Code of Conduct and Communication with Market Participants12) The majority of analysis conducted by Australia Ratings to determine a rating shall use publicly available information. Where an issuer elects to disclose confidential information such information will only be used in completing the rating analysis and not disclosed to any third party.
13) Any confidential information will only be used during the rating process and not disclosed unless the issuer makes such information available to the market.
14) Analysts will protect any confidential information received to minimise the risk of its disclosure through theft or fraud.
15) Analysts will be subject to trading black-out periods when any confidential information is being evaluated in determining a rating.
16) Analysts will be required to comply with the Australia Ratings securities trading policy. Compliance with this policy will be certified by employees on a quarterly basis.
17) Non public information and potential future rating action should only be discussed with the issuer and not disclosed publicly.
18) Use and disclosure of any confidential information should be restricted and used only within the context of the determination of the rating.
19) Analysts should not utilise confidential information for personal gain.
1) The Australia Ratings Code of Conduct is available via the company’s website and will be updated from time to time to reflect the provisions of the IOSCO Principles Regarding the Activities of Credit Rating Agencies and the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies. Any deviations in the Australia Ratings Code of Conduct will be noted and explained.
2) One of the functions of the Australia Ratings Board is to oversee governance of the rating business and compliance with the terms of the AFSL and communicate about any questions, concerns and complaints that Australia Ratings may receive.