According to the requirement of International Organization of Securities, Securities and Exchange Commission (SEC), European Securities and Markets Authority, Association of Credit Rating Agencies in Asia (ACRAA), the oversight policies in China as well as Dagong’s professional capability, Dagong redesigns and specifies more than 60 items of regulations, business process, operational regulations and technique standard of credit rating, forms a complete rating management system.
1. Regulate the rating process
In line with the requirement of the regulatory authorities, Dagong has improved the credit rating procedures, including rating preparation, preliminary evaluation, grade rating, rating result feedback and re-consideration, result publication, file archiving, surveillance and other stages.
Compliant to regulatory requirements, Dagong has built a real-time rating information filing system across systems and departments, ensuring controllable operation of the rating process through paper, electronic, audio and video files, and other forms of document.
2.Build a firewall inside the management system
By reforming and innovating the organizational structure, mechanism and regulatory system of the existing credit rating risk control system, Dagong has built a rigorous internal risk control system to ensure that the ratings are independent, objective and impartial.
(1) Dagong has clarified duties in the organizational structure and separated credit rating and marketing to prevent insider trading.
(2) Dagong has separated debt rating from non-debt rating, and management consultancy from corporate risk management.
(3) Dagong has established a top-down system of compliance and quality management, and set up an auditing and compliance department which is in charge of assessment and conducts comprehensive and whole-process risk supervision and inspection of daily operation, credit rating, rating review, research and other activities.
(4) Dagong has established an internal risk control system through the establishment of auditing and compliance units in the qualified subsidiaries and branches, inspection rules and regular compliance inspections.
(5) Dagong has established effective and reviewable systems for auditing and compliance inspection as well as rewards and penalties against potential risks.
(6) Dagong has authorized quality and compliance evaluation personnel to attend the rating review meetings for risk supervision, and to make proposals, warnings and declarations on the violations occurring during the review.
(7) Dagong has strengthened the statistics and examination of the default rate. The special research group of the post-doctoral research center and the data center cooperate in the dynamic statistical analysis of various kinds of data related, to monitor the quality of credit ratings and review.
3. Prevent operational and moral risks through regulation structure
（1）We have built a dual-rating system, in which rating analysts and data analysts independently issue their rating suggestions to minimize, if not eliminate, technical and moral risks.
(2) A complete rating system has been built to specify rating procedures. For instance, all leaders including the Chairman in Dagong are prohibited from intervene in ratings and analysts are also prohibited from assigning pre-ratings on rated enterprises.
(3) The conduct of staffs involved in rating and marketing are regulated, added with strengthened education on market responsibility and social responsibility. For example, all members of the Review Committee are required to take an oath of office, publicly promising diligently serve for investors.
（4）Professional staffing of rating projects are standardized to ensure rational structure and compliance in allocation, which ultimately serves for producing quality credit information.
（5）Both inside and outside supervision mechanism for rating review are strengthened. In addition to the Review Committee’s inside supervision, the outside supervision mechanism has formed two appeal channels: one is through Credit Review Committee or Professional Review Committee; the other is through Appealing Committee.