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China's Limited Market Data Delays Upgrades to Brokers' Risk Models, S&P Says

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China's limited market history could slow down improvements in brokerage firms' risk models amid rising risks, S&P Global Ratings said Thursday.

Shorter historical data compared to other developed markets could limit the assessment of a greater range of extreme downturns, S&P said.

The rating agency still expects risk modeling to grow more sophisticated as major brokers take the lead in these efforts.

However, a thorough assessment should be applied to test the models' effectiveness, S&P said.

The rating agency also suggests market-neutral frameworks to absorb directional exposure.

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