The Optimization Approach Of Credit Rating Supervision In China’s Bond Market

The importance of credit ratings in the bond market is obvious.From a micro perspective,credit ratings provide investors with decision-making information and play the role of a "gatekeeper" in the bond market;from a macro perspective,credit ratings are an indispensable part of the debt financing process and affect the stability of the financial market.However,credit rating is like a double-edged sword.The failure of the self-discipline constraint mechanism will lead to the failure of the role of the "gatekeeper" of the credit rating agency and the failure of the rating.During the subprime mortgage crisis in 2008,the false high ratings issued by credit rating agencies increased the bubble of subprime financial products,resulting in the failure to disclose risks in time,and the rapid downgrading of rating agencies after the crisis intensified investors.Panic.After the subprime mortgage crisis in 2008,credit rating agencies have been controversial.Therefore,after the crisis,countries began to carry out regulatory reforms on credit ratings,and the supervision of rating agencies from various countries gradually became stricter.The reform has improved to a certain extent the status of credit rating agencies as the “gatekeeper” of the bond market that is neglecting to fulfill their obligations.In the 1980 s,China’s credit rating market gradually developed with the unified management of the bond market.On the one hand,credit ratings started late,and the development of the regulatory system was not sound;on the other hand,since 2014,frequent debt defaults have occurred in China,and credit rating agencies have also played a "push hand" role in the wave of bond default.If the credit rating fails to function as a "gatekeeper",it may lead to systemic risks in the financial market in the long run.Therefore,improving China’s credit rating supervision system is of great significance to the steady development of China’s bond market and the stable operation of the financial market.The full text is divided into four chapters:Chapter one gives an overview of credit rating.First,it introduces the rise and definition of credit rating and its function in the capital market.Secondly,the research on the credit rating supervision model was introduced,which introduced the early rating agencies ’self-regulation under the constraints of the reputation mechanism.Since then,due to the issuer’s payment model and other reasons,the rating agencies’ self-regulation has failed,so countries have carried out regulatory reforms on the rating industry.Chapter 2 details the experience of the US and the EU in the reform of credit rating supervision after the subprime crisis.The United States and the European Union mainly made the following reforms: first,the reform process from no special legislation to the establishment of a legislative system was completed for credit ratings;second,the reform of the credit rating agency registration system was completed,and differential supervision of small and medium rating agencies was implemented,Support it to help it gain competitiveness in the rating market;third,in order to weaken conflicts of interest,set up firewalls between rating agencies and stakeholders and between rating agency internal businesses,and reform rating agency charging models A certain degree of exploration has been carried out.Chapter 3,based on the performance of China’s credit rating agencies in the bond market,proposes three defects in China’s credit rating supervision,including an imperfect supervision system,serious market concentration problems,and conflicts of interest.The analysis in the first three chapters provides ideas for the optimization of China’s credit rating supervision.The fourth chapter combines the analysis of the previous chapters and proposes that China’s credit rating supervision should focus on the following three points in the optimization process.First of all,China ’s credit rating supervision should first improve the coordination between the subjects.On the one hand,it is necessary to introduce supporting rules as soon as possible under the unified supervision system framework,and establish a system of coordinated and effective collaboration mechanisms;Self-discipline supervision system in line with China’s actual situation.Secondly,China should use a variety of ways to promote the market-oriented and standardized development of credit ratings.On the one hand,the government can support small-scale credit rating agencies to help them grow to a competitive position;on the other hand,a post-market access evaluation mechanism should be established to allow the evaluation mechanism to achieve the survival of the fittest rating agencies and promote their healthy development.Finally,China should establish regulatory rules that weaken conflicts of interest.On the one hand,we should continue to explore the investor payment model,and develop a situation in which the investor’s payment rating model coexists with other payment models in a reasonable way to promote symbiosis;on the other hand,we can improve the existing rating model and develop a "dual rating" model.