I kind of understand the second reason to shut down the company, but the first one is honestly braindead. If we assume people are somewhat rational, just not having them in the same room doesn't change the incentive structure for collusion. Collusion is inevitable no matter if they are in the room or not.
I think it's a matter of following the norms in a heavily regulated industry. For instance, if you're working in an investment bank, you'd have to ensure that all your work communication is on a platform that can be monitored by your company (and the regulator). So if you end up, say, messaging your colleague on WhatsApp, it would flout the regulations and either you or your company (or both) can be in trouble. Doesn't matter if it was a harmless text and you weren't insider trading or doing anything else that's nefarious -- it's just the general nature of the industry.
Also something about this particular instance (part of footnote #2) is that Brickwork didn't document this meeting as would be required. It's like putting your hand in a jar of cookies and not telling your mom about it. Maybe you didn't actually take the cookies but well, your mom isn't going to be happy about it.
The second factor - not updating the rating on time- is a function of cost and dependence on the company or trustee to duly notify the agency on time. Most intermediaries rely on the parties to notify them of the events first and I think no-one is independently checking things unless their own money is on the time. If they do independently monitor - or do a re-rating - they'll have to charge the company for that.
Forget all the compliance part as pointed out by SEBI.
In last 5 years rating advisory or credit rating consultant has grown up in the country like mushrooms every City metro or tire 2 3 4 cities every where, now i would like to understand what is this consultancy means when the rating is done on merits of Audited books & operational information and this consultant promises upgrade "how" & charges a hefty consultancy fees
I kind of understand the second reason to shut down the company, but the first one is honestly braindead. If we assume people are somewhat rational, just not having them in the same room doesn't change the incentive structure for collusion. Collusion is inevitable no matter if they are in the room or not.
I think it's a matter of following the norms in a heavily regulated industry. For instance, if you're working in an investment bank, you'd have to ensure that all your work communication is on a platform that can be monitored by your company (and the regulator). So if you end up, say, messaging your colleague on WhatsApp, it would flout the regulations and either you or your company (or both) can be in trouble. Doesn't matter if it was a harmless text and you weren't insider trading or doing anything else that's nefarious -- it's just the general nature of the industry.
Also something about this particular instance (part of footnote #2) is that Brickwork didn't document this meeting as would be required. It's like putting your hand in a jar of cookies and not telling your mom about it. Maybe you didn't actually take the cookies but well, your mom isn't going to be happy about it.
I agree with your assessment, all I'm saying is that this form of regulation is implicitly ineffective. Maybe that's by design.
What could be a better alternative?
Loved the read, very informative
The second factor - not updating the rating on time- is a function of cost and dependence on the company or trustee to duly notify the agency on time. Most intermediaries rely on the parties to notify them of the events first and I think no-one is independently checking things unless their own money is on the time. If they do independently monitor - or do a re-rating - they'll have to charge the company for that.
Well articulated 💯💯
When anyone pointing finger to someone remember four fingers are pointed towards himself
Forget all the compliance part as pointed out by SEBI.
In last 5 years rating advisory or credit rating consultant has grown up in the country like mushrooms every City metro or tire 2 3 4 cities every where, now i would like to understand what is this consultancy means when the rating is done on merits of Audited books & operational information and this consultant promises upgrade "how" & charges a hefty consultancy fees