Rules for Acuité’s Analytic Firewalls

Last Reviewed On: March 04, 2023 (Version 4.0)

  1. Objective:
  2. The aim of the Analytic Firewall Rules is to ensure that the Rating Analysts have the necessary independence to express their opinions objectively and independently, free from any influence that may raise questions about the integrity of the rating exercise.

  3. Analytic Firewalls:
  4. What is an Analytic Firewall?
    Analytic Firewall is a set of rules that governs the interactions between two sets of employees of Acuite to meet the above objective:

    1. Employees who have access to analytical process, rating notes, rating outcomes prior to public disclosure (Rating Analytical team, Rating Committee members, Rating Administration team and anyone who has access to rating notes and/or client confidential information)
    2. All other employees not covered above (e.g.: Business Development)

    These rules cover the following:

    1. People in category "b.” shall not be provided access to physical workspaces of employees in category "a.”
    2. People in category "b.” shall not be provided access to virtual workspaces (i.e. emails / folders / databases or any other electronic or printed material) of employees in category "a.”
    3. Employees in category "b.” shall not send any emails to any employee in category "a.” to convey any matter that may directly or indirectly influence the rating outcome.
    4. Employees in category "a.” shall not have access to rating fee of individual clients / transactions and are prohibited from participating in any discussion or in rating fee negotiations for an issue or issuer.
    5. Employees in category "b.” shall not have access to rating outcome or rating notes prepared by analysts or rating releases prior to public dissemination.
    6. Joint interactions of members from analytical and business development teams with clients, when undertaken, shall be reported to the Chief Analytical Officer (CAO). The senior most person in the meeting shall ensure that there is no breach of the analytic firewall during such joint interactions. In case, a breach takes place it must be promptly reported, and the CAO will take necessary action (e.g. inter alia reallocation of the case to a different analyst), as may be appropriate to ensure analytical integrity.
    7. Employees in category "a.” shall not disclose any confidential information to any other individual who is not meant to have access to such information. They are prohibited from disclosing confidential information to other Rating Analysts who are not directly involved in the rating process for the rated entity to which such information pertains.
    8. The confidentiality of all non-public information provided to Acuité by an issuer pursuant to any rating exercise must be safeguarded. Information about a ratings action or potential ratings action is confidential and may not be shared with anyone other than employees in category "a.” who need to know such information, and the issuer and persons authorised by the issuer to act on behalf of the issuer.

    These rules are complementary to all the other Rules, Policies and Procedures currently in force and/or that may be adopted by Acuité from time to time.

    SEBI vide its updated Operational Circular for CRAs (SEBI/HO/DDHS/DDHS-RACPOD2/P/CIR/2023/6) dated February 3, 2023 had advised CRAs to formulate a policy on separation or firewall practices with the non-rating entities and document the same in their internal operational manuals or governing document. The extant "Rules for Acuité’s Analytic Firewalls” is also complementary to "Policy on separation or firewall practices with the non-rating entities” of Acuite.