Standard & Poor's Ratings Group staunchly opposes further regulation of the derivatives industry, but the agency said Thursday it will try to allay investor concerns about the products with an enhanced rating system.
S&P said it will introduce within the next couple of weeks the use of an R symbol with its ratings, which will "indicate that that bond issue has a market or derivative risk that is significant."
Favors More Disclosure
Leo O'Neill, president of the Ratings Group, said while there is no need for more regulation of the derivatives market, more disclosure is a good idea.
However, the need for greater disclosure, he said, does not arise from any systemic problems with the usage of derivatives, but from the all too frequent practice of hiding the risk in "an otherwise identified bond issue."