A Comparative Analysis of the Russian and International Regulation on the Credit Rating Agencies

This study is devoted to the issue of regulation of credit rating agencies in Russia and abroad, which needs to be addressed urgently in order to overcome the inefficiency of the market mechanisms. The paper examines the objectivity and efficiency of the assigned credit ratings amid strengthening globalization and increasing role of the credit rating agencies in the financial markets, and defines the key causes of the market failures linked to the credit rating agencies’ business, including lack of perfect competition, transparency and responsibility of the credit rating agencies, and existence of potential conflict of interest due to issuer-pay model. Moreover, the paper identifies and presents the analysis of the existing mechanisms of control and regulation of the credit rating agencies’ activity in the United States, the European Union and some Asian countries. Finally, this study evaluates the newly developed by the CBR Law “222-FZ” aimed at improving the efficiency of the Russian industry of credit rating agencies, and provides some recommendations on further development of the model of the credit rating agencies’ regulation in Russia taken into account the expertise of other countries and potential negative externalities from the current regulatory framework.