SEC advocated reform of credit rating system.

U.S. Securities and Exchange Commission (SEC) or the credit rating agencies will present the draft regulations require complex financial instruments, risk rating, which rating agencies, investment banks and other institutions want to see. .<P> (Http://finance.) Will move the so-called structured products and more traditional corporate bonds and municipal bonds to distinguish. .Structured products has been considered the chief culprit in the recent financial crisis triggered. .Rating agencies have also been widely criticized, the market that these institutions to grant over-optimistic mortgage-related securities ratings, and in the live show Shiyou property market slow to respond to the crisis, there is no timely downgrade. .</ P> <P> SEC is expected to be June 11 to vote on this adjustment, which will include a wide range of rating agencies in the reform plan. .Reform plan will be for public comment, followed submission of the final approval. .This adjustment was SEC Chairman Christopher Cox for their support. .He said the proposal stage confident that the Committee will formally consider the idea, if it eventually included in the draft regulations, he would not be surprised. .</ P> <P> according to the current rating system, AAA level is the highest rating, means that the bonds have little likelihood of default; even if the event of default, investors can recover most of the principal. .Many investors rely almost exclusively on credit ratings making investment decisions. .In accordance with the proposed new system, the highest rating of structured products is AAA S or AAA V, representing the structural or volatility. .</ P> <P> distinguish between the idea of rating the market also caused controversy. .Supporters argue that after the increase in the rating label is not conducive to a depth of those involved in municipal investors; and critics have said, the key is not a rating level, but rather the quality rating. .</ P> <P> SEC is responsible for supervision of several rating agencies, these agencies include Moody's Moody's Investors Service, McGraw - Hill's Standard & Poor's Ratings Services and Fimalac SA's .Fitch Ratings. .</ P> <P> Mortgage Bankers Association and the National Association of Realtors and three other lobbying organization responsible for overseeing the SEC jointly to the Senate Banking Committee submitted a letter. .The group said the idea would be counterproductive, would further pressure the market, not help the market recovery and mobility. .</ P> <P> American Securitization Forum and the Congress met with SEC staff. .The agency sent a letter to the SEC, said the development of different rating system is nowhere near enough, in addition to causing the rising costs of no practical significance. .However, the organizations to support regulatory measures to improve information disclosure, or increase the transparency of the rating process. .American Securitization Forum is a subsidiary body of the Wall Street lobby. .</ P> <P> rating agencies themselves are also adjusted to improve the rating methods and procedures. .Standard & Poor's is planning for public comment, the letter expressed its structured finance ratings to add a postscript; but according to one insider, the company adopted a new rating system does not agree that more radical measures. .</ P> <P> individual rating will be SEC will consider one of several ideas. .Other proposed adjustments include increase in the rating methodology and rating the performance of the previous disclosure of information to rating agencies and the prohibition of the practice involved in structured securities. .The three Republican members of the current SEC under the auspices of the operation. .This situation may change this fall, when Democratic members of the two vacant seats will be in place, a Republican seats will be adjusted, it is likely that the end result is full of variables. .</ P>.