INCREASED DISCLOSURE REGULATIONS?

       After misreading risks of investing in sub-prime mortgage securities that triggered the current global financial crisis, Moody's Investors Service, Standard & Poor's and Fitch Ratings are about to face more disclosure requirements and greater accountability for debt analyses.
       Bloomberg reported the US Securities and Exchange Commission would propose firms seeking to sell bonds disclose the grades they received while shopping among credit-rating companies, quoting people familiar with the matter.
       Other changes scheduled for disuccion today at a Washington meeting may make it easier for investors to sue credit raters and require the companies to disclose revenue from their biggest clients, the people said.
       Congress will decide whether the steps go far enough to reform an industry whose wrong assessments on subrime-mortgage securities fuelled the financial crisis by helping banks sell assets that went sour.
       House Financial Services Committee chairman Barney Frank this week said he wanted to cut references to credit ratings from US rules, because the provisions fostered reliance on ratings and deter investors from doing research.
       "What happens as a result of these rules is that investors have to buy securities that have particular ratings," said Frank Partnoy, a University of San Diego law professor and former Morgan Stanley banker who has written research papers about credit-rating companies.
       "It creates this incredible dysfunctionality where the ratings agencies, instead of surviving based on their ability to generate good ratings, are basically selling licenses" to the capital markets.
       The SEC will seek addiional comment on a proposal, issued in June 2008, to drop requirements that the US$3.5 trillion (Bt118 trillion) mutual-fund and money-market industry rely on assessments from ratings companies for purchase decisions, according to the people. The SEC plans include removing some references to ratings from its rules, the people said.
       "The commission will consider measures to strengthen oversight of credit-rating agencies and improve the quality of ratings through greater transparency and accoutntability," SEC spokesman John Nester said on Tuesday.