Government of pakistan securities and exchange commission of pakistan notification

(d)
Conflict of interest
  
The analyst :
(i) 
is not an associate of any director, substantial shareholder or senior management 
officer of the customers 
77
[rated by the analyst];
(ii) 
is not substantial shareholder of the customer being rated by the 
78
[analyst]. A 
disclosure to this effect should be obtained by the credit rating company; and
(iii) 
is not a director of an entity being rated by the 
79
[analyst].
77
Substituted for the text “of the credit rating company” vide S.R.O. No.1223(I)/2019 dated October 10, 2019
78
Substituted for the text “credit rating company” vide S.R.O. No.1223(I)/2019 dated October 10, 2019
79
Substituted for the text “credit rating company” vide S.R.O. No.1223(I)/2019 dated October 10, 2019

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Page 53 of 54 
Annexure G 
CRITERIA AND METHODOLOGIES TO BE DEVELOPED AND DISCLOSED BY  
CREDIT RATING COMPANIES [see regulation 11(C)(r)]  
  
The criteria, methodologies and procedures to be developed and disclosed by a credit rating 
company shall include at least the following:
(i) 
Entity rating criteria for each class of entity.
(ii) 
Instrument rating criteria for various types of instruments like Corporate Bonds, Govt. 
Bonds, Sukuk, Preference Shares etc.
(iii) 
Rating criteria for structured financial products.
(iv) 
Criteria for rating watch and its timeline.
(v) 
Criteria for rating outlook and its meaning.
(vi) 
Methodology governing linkages between parent and subsidiary companies.
(vii) 
Criteria on subordinated loans and preferred debt by corporate and financial institutions.
(viii) Correlation between short and long term rating scale.
(ix) 
Definition of default and calculation of the default rates.
(x) 
pricing policies and fee structure