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Standard & Poor’s (S&P) will quit Australia’s retail market following ASIC’s decision to strengthen oversight of credit rating agencies.
The new rules, which take effect in 2010, will make rating agencies more vulnerable to legal action if their ratings are used by companies, including banks, to raise funds from retail investors.
S&P Fund Services, a research branch of S&P that provides services to the wealth management industry, will not be affected by S&P’s decision.
Companies with continuous disclosure obligations under the Corporations Act may be impacted by S&P’s market withdrawal, as they may be prevented from publicly disclosing their ratings.
Despite S&P’s withdrawal from the retail market, S&P announced that it would apply for a ‘wholesale’ Australian Financial Services Licence under the Australian financial services laws.
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