| (a) | external credit assessment institution; or |
(b) export credit agency,
that wishes to be recognised as an eligible institution for purposes of these Regulations shall obtain the prior written approval of the Registrar and shall comply with such conditions as may be specified in writing by the Registrar.
| (2) | The Registrar shall not grant approval as envisaged in subregulation (1) unless, as a minimum— |
| (a) | the relevant external credit assessment institution complies with the requirements specified below. |
The methodology in terms of which an external credit assessment institution assigns credit assessments in respect of a particular market segment—
| (A) | shall be well established for such a minimum period as may be specified by the Registrar, which minimum period shall in no case be less than one year; |
| (D) | shall be based on a combination of qualitative and quantitative elements; |
| (E) | shall be subject to appropriate validation, ongoing review and backtesting; |
| (F) | shall be responsive to changes in financial condition. |
The external credit assessment institution shall be independent in the sense, for example—
| (A) | that the institution shall be free from political or economic pressure that may influence a particular rating; |
| (B) | that the composition of the board of directors or the shareholder structure of the institution to be assessed shall not create any conflict of interest. |
| (iii) | International access |
Individual assessments issued by the external credit assessment institution as well as the key elements underlying the assessments and whether the relevant issuer participated in the assessment process shall be publicly available on a non-selective basis, provided that—
| (A) | in the case of a private assessment, the Registrar may, subject to conditions determined by the Registrar in writing, allow a deviation from the aforesaid requirements; and |
| (B) | in all cases, the general procedures, methodologies and assumptions for arriving at assessments, used by the relevant external credit assessment institution, shall be publicly available. |
As a minimum, an external credit assessment institution shall publicly disclose—
| (B) | the general nature of the compensation arrangements between the external credit assessment institution and the relevant assessed entities or institutions; |
| (C) | the assessment methodologies used by the said external credit assessment institution, including— |
| (i) | the definition of default; |
| (ii) | the time horizon used in the rating process; |
| (iii) | the meaning of each relevant rating; |
| (D) | the actual default rates experienced in respect of each assessment category; |
| (E) | the transitions relating to the various assessments, that is, the likelihood of, for example, a AA rating becoming an A rating over time. |
An external credit assessment institution shall have sufficient resources—
| (A) | to conduct high quality credit assessments, which assessments shall be based on a combination of qualitative and quantitative elements; |
| (B) | to allow for substantial ongoing contact with personnel at senior and operational levels within the assessed institutions. |
As a minimum, the credibility of an external credit assessment institution shall be evidenced by—
| (A) | the reliance being placed on the institution's external credit assessments by independent parties such as investors or insurers; |
| (B) | the existence of comprehensive and duly documented internal policies and procedures to prevent the abuse of confidential information. |
(b) the relevant export credit agency—
| (i) | publishes its risk scores; |
| (ii) | subscribes to any relevant OECD agreed methodology to assign country risk scores, which methodology currently establishes eight risk score categories associated with minimum export insurance premiums. |
