Press Release
For immediate release 11 December 2008
Asset Managers address over-reliance on Credit Ratings
EFAMA, the ESF and the IMA jointly publish today the "Asset Management Industry Guidelines to Address Over-Reliance upon Ratings", providing guidance for asset managers on the responsible use of ratings for securitisation, structured finance and structured credit products.
The Guidelines show the industry's strong commitment to apply the lessons learned from the recent financial turmoil. They have been produced as a response to the call of the Financial Stability Forum (FSF) on investors to address their over-reliance on ratings and to review their standards of due diligence and credit analysis when investing in structured credit products.
The initial impetus for the Guidelines was the "Ten Industry Initiatives to Increase Transparency in the Securitisation Market", an industry-led initiative coordinated by the ESF and first announced in July 2008. EFAMA and the IMA subsequently prepared these Guidelines with the ESF.
Peter De Proft, Director General of EFAMA, comments:
"The Guidelines demonstrate the industry's strong commitment to appropriate standards of due diligence and credit analysis. A sound credit analysis is an integral part of the asset manager's obligation to act professionally and in the best interest of its clients, and over-reliance on credit ratings should be avoided."
Rick Watson, Managing Director of the European Securitisation Forum, notes:
"The securitisation industry is very committed to enhancing credit assessment processes by structured finance investors, as a means of reducing reliance on ratings. These principles are an important step in the development of maximum transparency in this industry."
Guy Sears, Director, Wholesale IMA, adds:
"Our members manage other people's money and act in their clients' best interests. This means that when others rely on you, you should be able and willing to meet that expectation and not blindly follow what a CRA might say."
The Guidelines are available here.
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For any questions, contact:
EFAMA
Peter De Proft, Director General
Peter.Deproft@efama.org
+32-2-513 39 69
ESF
Katrina Cavalli, Vice President, Strategic Communications
kcavalli@sifma.org
+1 (212) 313-1181
IMA
Mona Patel, Head of Communications
MPatel@investmentuk.org.
+44 (0)20 7831 0898
Notes to editors
About European Fund and Asset Management Association (EFAMA)
EFAMA is the representative association for the European investment management industry. EFAMA represents through its 24 member associations and 42 corporate members about EUR14 trillion in assets under management of which EUR7.3 trillion managed by around 52,000 investment funds at end June 2008. For more information, please visit http://www.efama.org/.
About the European Securitisation Forum (ESF)
The European Securitisation Forum, an affiliate of the Securities Industry and Financial Markets Association is the voice of the securitisation and CDO market place in Europe, with the purpose of promoting efficient growth and continued development of securitisation throughout Europe. Its membership is comprised of over 160 institutions involved with all aspects of the securitisation and CDO business, including issuers, investors, arrangers, rating agencies, legal and accounting advisors, stock exchanges, trustees, IT service providers and others. The ESF has two sister organisations: the American Securitization Forum and ASIFMA. The credit rating agency members of the ESF have not been party to ESF discussions in relation to these guidelines nor have they been involved in the formal ESF process to endorse the guidelines. For more information, please visit http://www.europeansecuritisation.com/.
About Investment Management Association (IMA)
IMA is the trade body for the UK's £3.4 trillion asset management industry. The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs. Its role is to represent the industry and promote high standards. For more information, please visit here.