Chinese credit-rating agency denied entry by US authorities, claims bias

15:20, September 26, 2010      

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In response to U.S. authorities' rejection of its application for registration as a Nationally Recognized Statistical Rating Organization (NRSRO) in the United States, China's private credit rating firm Dagong Global Credit Rating Co., Ltd is claiming there is a bias against Chinese credit-rating agencies.

Dagong released a statement on Sept. 25 saying that its application for NRSRO status in the United States is rational and complies with rules and laws, and the contention by U.S. authorities that they are unable to handle cross-border oversight and regulation amounts to bias against Chinese credit-rating agencies. Dagong will not accept the NRSRO status at the price of betraying national sovereignty, according to the statement.

The U.S. Securities and Exchange Commission (SEC) issued an announcement on Sept. 23 on its official website that it had objected to Dagong's application for registration as a NRSRO because it cannot perform cross-border oversight and regulation of Dagong.

Dagong said that its application for the NRSRO status in the United States has completely been a type of market conduct.

"We will absolutely not accept the one and only reason put forth by the SEC - that it cannot perform cross-border oversight and regulation."

NRSRO refers to the qualification reviewed and approved by the SEC to allow a credit rating agency to conduct business in the United States.

Dagong said that the SEC has unreasonably denied the application of a Chinese credit rating agency that met application standards. It is not only against the rules of the American "Securities Exchange Act," the "Oversight of Credit Rating Agencies Registered as Nationally Recognized Statistical Rating Organizations," and related international rules and laws but also resulted in a huge loss for Dagong.

"Dagong will consider conducting activities at the right time to protect its rights, including seeking legal actions against the SEC," the statement read.

The statement went on to point out that as the largest creditor country of the United States, China owns a huge amount of financial assets in the United States, so having China's own say in credit rating in the United States is significant to safeguarding the security of China's overseas financial assets.

"The SEC's deliberate denial is evidently aimed at preventing Dagong from gaining influence in the international credit rating market, and at maintaining the monopoly of three U.S.-based major credit rating agencies," the statement read.

Dagong released China's first sovereign credit rating report in July 2010, which was the first time that a credit rating agency from a non-Western country published sovereign credit risk information to the world. Dagong's sovereign credit rating results were distinct from the ones released by Fitch, Standard & Poor's or Moody's, the world's three major credit rating agencies.

By People's Daily Online


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