Annex VII Issuance and review of credit ratings
(Articles 16, 17 and 18)
1. The information regarding the policies and procedures referred to in Article 16(2)(a) regarding the development, validation and review of the CRA's rating methodologies shall include:
(a) the responsibilities and process for rating methodology development and sign off, including details on the composition of the rating methodology committees and the procedures for members' selection;
(b) the responsibilities and process for rating methodology, including:
(i) the verification and validation of a rating methodology;
(ii) the validation of the rating methodology based on historical data, including how the results of the back-testing are taken into account. In addition, the credit rating agency shall also include the results of such validation/back-testing for the past three years, where quantitative data is available;
(iii) the reporting of the outcome of the rating methodology review; and
(iv) the implementation of a change in methodology, model or key rating assumptions.
2. The information regarding the policies and procedures referred to in Article 17(1)(c) regarding the issuance of credit ratings shall include: