Division 1 The information regarding the policies and procedures referred to in Article 16(2)(a) regarding the development, validation and review of the CRA’s rating methodologies shall include:

the responsibilities and process for rating methodology development and sign off, including details on the composition of the rating methodology committees and the procedures for members’ selection;

the responsibilities and process for rating methodology, including:

1. (i)

   the verification and validation of a rating methodology;

2. (ii)

   the validation of the rating methodology based on historical data, including how the results of the back-testing are taken into account. In addition, the credit rating agency shall also include the results of such validation/back-testing for the past three years, where quantitative data is available;

3. (iii)

   the reporting of the outcome of the rating methodology review; and

4. (iv)

   the implementation of a change in methodology, model or key rating assumptions.