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.