The Fitch Ratings Securities Firms Group uses a comprehensive research approach encompassing both quantitative and qualitative analysis to arrive at a rating decision for securities firms. The group assesses the quality of each issuer on a historic and prospective basis with respect to its ability to make timely interest and principal payments through the full business cycle. The group's rating methodology begins with an assessment of financial fundamentals, contact with senior management and identification and analysis of relevant risks. From this complete fundamental analysis, Fitch develops expectations for future earnings performance under various operating or economic scenarios and prepares peer comparisons.
Coverage
The quantitative component of the group's rating process focuses on fundamental financial analysis of:
> Historical performance
> Trend analysis
> Analysis of risk aversion
> Assessment of market, credit, liquidity, counterparty and reputation risks
> Reviews of capital and leverage
The qualitative component the rating process is the result of an assessment of:
> Management depth and experience
> Strategic position
> Competitive advantage
> Funding stability
> Risk management capabilities
