May 23, 2025
IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)
AND
IN THE MATTER OF
THE PROCESS FOR DESIGNATION OF
CREDIT RATING ORGANIZATIONS IN MULTIPLE JURISDICTIONS AND
IN THE MATTER OF
FITCH RATINGS CANADA, INC. and FITCH RATINGS, INC.
(the Filers)
DESIGNATION ORDER
Background
The principal regulator in the Jurisdiction has received an application from Fitch Ratings Canada, Inc. (Fitch Canada) and Fitch Ratings, Inc. (Fitch US, and together, the Filers) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that:
(a) Fitch Canada be designated as a designated rating organization (DRO) (the Designation Order), as contemplated by National Instrument 25-101 Designated Rating Organizations (NI 25-101); and
(b) the amended and restated designation order, dated April 25, 2022, designating Fitch US as a designated rating organization, be revoked.
The principal regulator in the Jurisdiction has also received an application from the Filers for a decision under the Legislation exempting Fitch Canada from certain provisions of NI 25-101 and revoking the previous order granted to Fitch US in 2012 that exempted it from certain provisions of NI 25-101. The principal regulator in the Jurisdiction is issuing such decision concurrently.
Under National Instrument 11-205 Process for Designation of Credit Rating Organizations in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the Commission) is the principal regulator (the Principal Regulator) for this application; and
(b) the Filers have provided notice that Section 4B.6(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions, MI 11-102 or NI 25-101 have the same meanings in this decision, unless otherwise defined herein.
Representations
This decision is based on the following facts represented by the Filers:
Fitch Canada
Fitch Canada is a corporation incorporated under the Business Corporations Act (British Columbia) with its head office and principal office at 22 Adelaide Street West, Suite 2810, Toronto, Ontario M5H 4E3.
Fitch Canada is a wholly-owned subsidiary of Fitch US, formerly known as Fitch, Inc.
Fitch US is a DRO in each of the Jurisdictions.
For operational and business reasons, Fitch US determined to incorporate Fitch Canada and to transfer to Fitch Canada the assets of its Canadian office located in Toronto, Ontario.
Fitch US
Fitch US is a Delaware corporation with its principal office located at 33 Whitehall Street, New York, NY 10004, USA.
Fitch US provides credit rating opinions, research and risk analysis to a broad range of financial institutions, corporate entities, government bodies and various structured finance product groups in North America, Europe, Africa, Australasia and South America.
Fitch US is a wholly-owned subsidiary of Fitch Group, Inc., a Delaware corporation that is a wholly-owned subsidiary of Hearst Ratings II, Inc.
Fitch US is a Nationally Recognized Statistical Rating Organization (NRSRO) regulated in the United States by the Securities and Exchange Commission (SEC), which includes related global offices that issue ratings under the Fitch Ratings global brand. As of December 31, 2023, Fitch US, together with its affiliates, rates more than 17,000 different entities that issue public or private debt.
Fitch US is in compliance in all material respects with U.S. federal securities law applicable to a NRSRO. For further disclosure, see Fitch US’ Form NRSRO filed with the SEC for the year ended December 31, 2024 available on the Filers’ website at https://www.fitchratings.com/regulatory.
Previous Order
On October 31, 2012, the OSC granted a designation order (the 2012 Designation Order) which designated Fitch US as a DRO and pursuant to which certain credit rating affiliates listed in Appendix A to the 2012 Designation Order were designated as DRO affiliates.
On April 25, 2022, the OSC granted Fitch US an amended and restated designation order (the 2022 Designation Order) to include Fitch Ireland as a DRO affiliate and remove certain entities as DRO affiliates.
Given the transfer from Fitch US to Fitch Canada of Fitch US’ Canadian operations, the Filers have applied for (a) the Designation Order to designate Fitch Canada as a DRO pursuant to subsection 22(2) of the Securities Act (Ontario), and (b) the 2022 Designation Order to be revoked pursuant to subsection 144(1) of the Securities Act (Ontario).
Compliance with NI 25-101
- Fitch US has established a board of directors (the Board) which, pursuant to the rules made under the Securities Exchange Act of 1934 (the 1934 Act), oversees the management of Fitch US, in accordance with its fiduciary responsibilities and standards established by law, including the following:
a. the establishment, maintenance, and enforcement of policies and procedures for determining credit ratings;
b. the establishment, maintenance, and enforcement of policies and procedures to address, manage and disclose any conflicts of interest;
c. the effectiveness of Fitch US’ internal control system with respect to policies and procedures for determining credit ratings; and
d. the compensation and promotion policies and practices of Fitch US.
Section 15E of the 1934 Act establishes the regulatory framework for NRSROs. Subsection 15E(t) of the 1934 Act imposes a number of corporate governance requirements on NRSROs, including requirements that the NRSRO have a board of directors, that at least half (and no fewer than two) members meet prescribed independence criteria, that compensation for independent members satisfy certain conditions, that independent members be appointed for pre-agreed fixed and non-renewable terms not exceeding five years, and that the board fulfill certain prescribed responsibilities.
The Board has four members. As required by the 1934 Act, two members meet the independence criteria set out in subsection 15E(t)(2)(B) of the 1934 Act and at least one independent director is a user of ratings from an NRSRO. At least two members of the Board (including one independent member) have in-depth knowledge and experience at a senior level regarding the markets for securitized products.
Fitch Canada has elected to rely on the Board to satisfy the requirements and functions prescribed by Part 3 of NI 25-101 and sections 2.22 through 2.25 of Appendix A of NI 25-101. The Board will continue to oversee Fitch Canada in accordance with its global oversight role.
Fitch US has adopted and implemented the Fitch Code of Conduct (the Fitch Code), which is designed to be substantially aligned with the International Organization of Securities Commissions Code of Conduct Fundamentals for Credit Rating Agencies (the IOSCO Code). The Fitch Code satisfies the requirements of NI 25-101.
Fitch Canada has elected to rely on the Fitch Code to satisfy the requirements and functions prescribed by Part 4 of NI 25-101 and Fitch Canada will comply with the requirements of the Fitch Code.
Fitch US has also implemented a range of globally applicable policies, procedures, and guidelines, as well as operational and internal control infrastructures (the Global Policies) that are designed to achieve the objectives set out in the IOSCO Code and/or satisfy regulatory requirements that Fitch US implements globally. The Global Policies satisfy the requirements of NI 25-101.
Fitch US has adopted a File Maintenance and Recordkeeping Policy (the Recordkeeping Policy), which establishes guidelines for the management, maintenance and orderly disposition of analytical records. Pursuant to the Recordkeeping Policy, personnel located in Canada comply with the books and records requirements set out in Part 6 of NI 25-101. Fitch Canada will continue to comply with the Recordkeeping Policy and the books and records requirements set out in Part 6 of NI 25-101.
Fitch US has appointed a compliance officer who monitors and assesses compliance by Fitch US and its DRO employees with the Fitch Code and with applicable laws and regulations. Such compliance officer will oversee Fitch Canada and fulfill the designated compliance officer functions prescribed by Part 5 of NI 25-101.
The Fitch Code and the Global Policies meet in all material respects the objectives of NI 25-101 and enable the Filers to:
a. accommodate the global nature of Fitch US’ operations;
b. implement high level principles that govern the conduct of Fitch US’ credit rating activities and underlying regulatory requirements in the jurisdictions where Fitch US conducts credit rating activities; and
c. maintain and enforce globally consistent policies, procedures and internal controls that meet specific jurisdictional requirements, in addition to those which are reflected in the Fitch Code.
Fitch Canada will comply with the Fitch Code and the Global Policies.
The Filers have filed all documentation required under Part 2 of NI 25-101.
Each of Fitch Canada and Fitch US is in compliance in all material respects with NI 25-101 and the securities legislation applicable to credit rating organizations in each jurisdiction of Canada and in any other jurisdiction in which Fitch US and Fitch Canada or their credit rating affiliates operate.
Upon being designated as a DRO, Fitch Canada will be subject to the requirements set out in the Legislation and the securities legislation in each of the Passport Jurisdictions.
Decision
The Principal Regulator is satisfied that this decision meets the test set out in the Legislation for the Principal Regulator to make this decision.
The decision of the Principal Regulator under the Legislation is that:
(a) the 2022 Designation Order is hereby revoked;
(b) Fitch Canada is designated as a designated rating organization under the Legislation; and
(c) the credit rating affiliates listed in Appendix A to this Decision are designated as DRO affiliates.
“D. Grant Vingoe”
D. Grant Vingoe
Chief Executive Officer
Ontario Securities Commission
OSC File #: 2020/0577
APPENDIX A
Credit Rating Affiliates of Fitch Ratings Canada, Inc.
FITCH RATINGS, INC. (United States)
FITCH RATINGS LIMITED (England)
FITCH RATINGS BRASIL LTDA (Brazil)
FITCH MEXICO S.A. DE C.V. (Mexico)
FITCH AUSTRALIA PTY LIMITED (Australia)
FITCH RATINGS SINGAPORE PTE LTD (Singapore)
FITCH (HONG KONG) LIMITED (Hong Kong)
FITCH RATINGS JAPAN LIMITED (Japan)
FITCH RATINGS IRELAND LIMITED (Ireland)