The current financial crisis provided an opportunity for Asia to consider establishing a rating agency of its own, most probably with some public source of funding support, Hong Kong Exchange and Clearing Ltd. Chairman Ronald Arculli said Tuesday.
Speaking at the second Asian Financial Forum, Arculli said that there has been a lot of discussions over the past year or so on an Asian rating agency and that it was clear that there have been deficiencies in how credit was rated.
"I think the financial crisis has focused on that in part because some people feel that some of the existing agencies fell asleep or did not adhere to the bible that made them so successful, " he said.
Arculli said there was nothing wrong with the methodologies but the visions of the rating agencies were "momentarily blurred" when they went completely commercial.
"One question that keeps resurfacing recently is whether rating agencies should be paid by issuers of credit," he said.
He proposed that there be some public source of funding for the potential Asian rating agency, like certain governmental or exchange support.
One of the options is for the exchange to levy a tiny fee so as to collect the fund needed for getting the rating agency started, he said.
Nevertheless he acknowledged it would be just as difficult to put together the experts as getting the fund, declining to specify any detailed timeline.
Arculli said one of the key lessons that the international community should learn from the current crisis was that the basics should not be forgotten.
"There is no such thing as low risk and high returns," he said.
While cautioning against overcorrecting with heavy-handed regulation in the aftermath of the financial tsunami, he called for "better discipline all along the financial chain," such as better risk control and power supervision.
The weathered financial professional also proposed better supervision of over-the-counter products by allowing them to be traded on exchanges.
(Xinhua News Agency January 20, 2009)
