AUSTRALIA - The Australian government has launched a review of the regulation of credit rating agencies (CRAs) and research houses in the country.
As part of that they would seek input from the Australian Prudential Regulation Authority (APRA) and other relevant agencies, together with stakeholders from the investor, shareholder and superannuation communities.
The review will start work immediately and report to the Ggovernment within six months.
He said: "There have been some very serious concerns voiced to me about the role CRAs may have played in some aspects of recent financial market problems, including the US sub-prime mortgage situation - so we need to make sure the system is up-to-date."
In addition to CRAs, the review will examine financial product research houses, in particular the role they played in the provision of advice to investors in several major recent corporate collapses, such as Westpoint.
"In relation to research houses, I've requested a review of the appropriateness of the current regulatory framework and whether it might also require updating."
"To ensure we get the full picture, the review will also look at how ratings advice is used by retail and wholesale investors.
"As such, I have asked Treasury and ASIC to consult with key investor groups such as the Securities and Derivatives Industry Association, the Investment and Financial Services Association, the Association of Superannuation Funds of Australia and the Australian Shareholders' Association."
The move comes as the Financial Times reported that New York senator Charles Schumer had called on the Securities and Exchange Commission to investigate after Moody's initiated a review of its ratings of $4bn of complex debt products following revelations it had awarded incorrect ratings because of a bug in its computer models.
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