Industry comments on Japan's new ratings rule

The Financial Services Agency's (FSA) second proposal, as with its first proposal released on Oct. 31, 2004, prohibits banks from using un-requested ratings, excluding those on central governments, under the standardized approach. FSA's explanation of its rationale for this proposal is that there is a concern about the possibility that External Credit Assessment Institutions (ECAIs) could use un-requested ratings to pressure issuers to request ratings.