1. Panel Session: Expanding the Scope of Scrutiny Hong Kong - 30 November, 2010

2. 2 Role of Credit Ratings in Financial Markets A.To meet market needs over time, credit ratings have developed important attributes  Insight and robust analysis  Symbols that succinctly communicate opinions  Broad coverage across markets and industries, enabling comparability  Public availability of opinions B.These attributes have made credit ratings the spoken and understood language of credit  A point of reference easily understood by market professionals  Promote dialogue and debate  Market commentary that helps flow of relevant information  Improve understanding of credit risk, which promotes market integrity and efficiency

3. 3 Evolving Regulatory Landscape - Background A.CRAs largely unregulated in most jurisdictions until recently  2003 – global securities regulators endorse IOSCO Principles for CRAs  Dec 2004 – global regulators ask CRAs to voluntarily comply with IOSCO Code  2006-2007: US adopts legislation and rules for NRSROs  May 2008: IOSCO Code revised B.April ‘09: G-20 members agree to introduce supervisory frameworks for CRAs  Some G-20 members already had regulations – e.g., US, Mexico, Argentina  Since then, some G-20 members have adopted or proposed frameworks  EU – Regulation adopted; regime coming into force 2010/2011  Australia – Licensing regime introduced 2010  Japan - Voluntary registration regime became law in April 2010, compliance on October 1, 2010  Canada – Regime proposed for comment 2010  Hong Kong - July Consultation Paper by the HK SFC; awaiting results of SFC deliberations  Other G-20 members expected to introduce regulation of CRAs soon – e.g., Brazil

4. Panel Session: Expanding the Scope of Scrutiny Hong Kong - 30 November, 2010