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Article 8 Exemption

In cases where there is limited quantitative evidence to support the predictive power of a credit rating methodology, a credit rating agency shall be exempt from complying with Article 7 of this Regulation if it:

  1. (a)

    ensures that credit rating methodologies are sensible predictors of credit worthiness;

  2. (b)

    applies internal procedures in a consistent way and over time and across different market segments;

  3. (c)

    has processes in place to ensure that systemic credit rating anomalies highlighted by back-testing are identified and are appropriately addressed.