Training on Forecasting September 17–18

Pricing Policy for Rating Services of the Analytical Credit Rating Agency (Joint-Stock Company)

1. General provisions

1.1. The present Policy defines the main principles of pricing used by ACRA for Rating Services.

1.2. ACRA is a commercial organization providing professional services on paid basis related to preparation, assigning, affirmation, revision, withdrawal, of Credit ratings and Credit Rating Outlooks in accordance with Federal Law of 13 July 2015 No 222-FZ “On the Activities of Credit Rating Agencies in the Russian Federation, On the Amendment to Article 76.1 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and the invalidation of certain provisions of legal acts of the Russian Federation”.

1.3. The present Policy shall be posted on ACRA’s website www.acra-ratings.com after it is approved by the Board of Directors (except the Annex to the Policy).

2. List of terms and definitions

2.1. ACRA – Analytical Credit Rating Agency (Joint-Stock Company).

2.2. CEO – an ACRA employee performing the functions of the sole executive body.

2.3. Compliance Director – an ACRA employee performing the functions of head of the Compliance and Internal Control Service.

2.4. Credit Rating – ACRA’s opinion on the ability of a Rated Entity to meet its financial obligations (creditworthiness, financial reliability, financial stability) and/or on the credit risk of its specific financial obligations or instruments, expressed through a rating category.

2.5. Credit Rating of Structured Finance Instruments and Obligations – ACRA’s opinion on the probability and magnitude of losses related to rated obligations of an SPV (or similar issuers and Rated Entities) that depend on the ability of this SPV to fulfill its financial liabilities secured by monetary claims and/or other property owned by this SPV and/or third parties. A credit rating of Structured Finance Instruments and Obligations is one of Credit Rating types.

2.6. Credit Rating of Financial Liability – ACRA’s opinion on the capability of the Rated Entity to meet its financial obligations on specific debt financial instruments or financial debt, as reflected by means of a rating category under a specific rating scale.

2.7. Rating Services – services provided in the course of implementation of Rating Activities.

2.8. Rating Activities – professional activities, performed on an ongoing basis, in aggregate consisting of the preparation, assignment, affirmation, revision, withdrawal of Credit Ratings, and Credit Rating Outlooks, based on the analysis of information in accordance with the Methodology and accompanied by the distribution of information on assigned Credit Ratings and Credit Rating Outlooks in any way, that ensures access to this information by general public. 

2.9. Rated Entity – a legal or public-law entity whose ability to meet its financial obligations (creditworthiness, financial reliability, financial stability) is directly or indirectly assessed in a Credit Rating.

2.10. Compliance and Internal Control Service — an ACRA unit functioning as an internal control body and headed by the Compliance Director.

2.11. Business Development Unit – an ACRA unit in charge of making contracts for provision of Rating Services and Additional Services and attracting new customers.

3. Main pricing principles

3.1. When formulating its pricing policy and specifying price parameters of specific customer agreements ACRA takes all possible measures to ensure their full compliance with the Russian Law and best international practices in this field.

3.2. The clients of ACRA are legal or public-law entities interested in obtaining and maintaining Credit Ratings. Objects of ratings include Rating Entities and/or their financial obligations or financial instruments.

3.3. The size of the fee for Rating Services shall not depend on the level of the assigned Credit Rating or Credit Rating Outlook or on the consent of the Rated Entity to the assigned Credit Rating or Credit Rating Outlook.

3.4. Relations between ACRA and its clients are formalized in a contract, based on a standard agreement, containing, inter alia, the pricing terms and conditions. When Credit Ratings are assigned to structured finance instruments and obligations, the contract may be significantly modified depending on the specific transaction type.

3.5. The Business Development Unit shall set prices for Rating Services on the basis of the ACRA's Rating Services Price List. The Price List shall be drawn up by the Head of Business Development Unit, agreed with the Compliance and Internal Control Service and reviewed and approved by the CEO on an annual basis. Possible changes in pricing are communicated to the clients following procedures set out in the contract.

3.6. Prices for Rating Services shall be set taking into account the following circumstances: (1) the type of rated entity or issue; (2) industry the rated entity belongs to; (3) the volume of assets and liabilities of the rated entity; (4) structural complexity of the rated entity; (5) regions of presence of the rated entity; (6) contractual deadlines; (7) complexity of rating analysis and extra labor costs.

3.7. The indicative price ranges shall apply to different types of Credit Ratings as specified in paragraph 1 of Annex to this Policy.

3.8. The pricing of Credit Rating of Financial Liability is based on the issue volume, is subject to a possible maximum and is set within limits outlined in the Annex to the present Policy. Clients issuing continuously on bond markets shall have the option of paying an annual commission covering Credit Ratings of all bonds originating from the issuer or group of companies. Clients with large volumes of annual bond issuance shall be eligible for individual terms of rating assignment to their issues, as set out in the Price List.

3.9. The pricing of Credit Ratings of Structured Finance Instruments and Obligations depends proportionally on the rated issues amount under the transaction and is subject to limitation of its maximum and minimum values within the boundaries defined by the Annex to this Policy, but may also include additional fees associated with larger volume or greater complexity of work related to the analysis of peculiarities of such transactions.

3.10. The pricing of maintaining Credit Ratings of Structured Finance Instruments and Obligations is subject to limitation of its maximum and minimum values depending on the parameters of the deal and within the boundaries defined by the Annex to this Policy. ACRA may charge a fee for termination of a contract for assigning and maintaining structured product credit ratings, with the amount of such fee being set in the Price List.

3.11. In specific cases, depending on complexity of the Rated Entity or instrument and potential additional analytical workload required, as well as with the aim to find an optimal match to the existing demand, an adjustment of the price shall be possible compared to the current Price List level.

3.12. The decision to adjust the price from the current Price List level by the amount not exceeding the one specified in paragraph 2 of the Annex to this Policy may be made by the Head of Business Development Unit independently based on the conditions and in accordance with clause 3.11. Other price adjustments shall be approved by the CEO upon recommendation by the Head of Business Development Unit.

3.13. Rating Services shall be provided by ACRA after the prepayment of the entire amount under the contract, except for cases stipulated by the Federal Law of 18 July 2011 No 223-FZ "On procurement of goods, works and services of certain kinds of legal entities" and the Federal Law of 04 May 2013 No 44-FZ "On the contract system in the procurement of goods, works, services for state and municipal needs".

3.14. Internal procedures and documents adopted by ACRA, including ACRA’s Code of Ethics and Professional Conduct, ensure that commercial operations, such as advertising, client engagement, price-setting and price negotiations, are fully isolated from processes of Rating Operations and Methodology development. Negotiations of price parameters of contracts, their potential changes in either direction, other commercial aspects, are performed by separate commercial units of ACRA and have no influence whatsoever on the work of the Rating Analysts, their compensation, or their opinions or decisions. 

4. Final provisions

4.1. This Policy shall come into effect upon its approval by the Board of Directors of ACRA.

4.2. Any changes or additions hereto must be made in writing, documented and agreed with the Compliance Director and approved by the Board of Directors of ACRA.

4.3. Any deviations from the requirements of this Policy leading to a violation of legal acts of the Russian Federation and Bank of Russia requirements are not allowed. Should any changes to the legislation of the Russian Federation or Bank of Russia bylaws come in contradiction with certain clauses of this Policy, such clauses shall become invalid, and until they are duly amended, ACRA employees shall be governed by the legislation of the Russian Federation.

4.4. Employees of ACRA must inform the Compliance Director about any violations of this Policy, as well as about any violations of requirements of legal acts of the Russian Federation or Bank of Russia requirements.

4.5. This Policy shall be revised on an as per needed basis, but not less frequently than once every 3 years.

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