REFILE-UPDATE 1-China unveils plans to straighten up country's ratings firms

(Corrects to fix typographical error in headline)

* PBOC, CSRC seek unified interbank, exchange-traded bond rating systems

* Regulators to collaborate on supervision, information sharing

* Ratings agencies told to improve corporate governance

SHANGHAI, Sept 11 (Reuters) - China’s central bank and securities regulator on Tuesday announced steps to strengthen supervision of credit-rating businesses in a bid to improve the quality of ratings.

The move comes less than a month after one of China’s big four ratings agencies was punished for violating regulations, and at a time concerns remain high about credit risks in China.

This year has seen a rash of corporate bond defaults, including some by issuers that had been awarded relatively high ratings by domestic firms.

In a joint statement, the People’s Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC) listed guidelines for the ratings business to “push forward communication in the bond market, and promote the orderly development of the rating industry”.

The guidelines call for unified vetting of ratings agencies in both the interbank and exchange-traded markets.

They also are intended to consolidate and reorganise agencies, and to strengthen oversight and information-sharing among regulators.

The PBOC, CSRC and the National Association of Financial Market Institutional Investors (NAFMII) will collaborate on the review and registration processes for bond rating agencies, the statement said.

It also said regulators can conduct supervision and inspection into credit rating agencies when necessary, including on-the-spot checks that can lead to issuance of penalties.

The regulators called on rating agencies to improve corporate governance and “guard against conflicts of interest” to help ensure the quality of their ratings.

A senior trader at an asset management firm in Shanghai said unification of ratings standards would help prevent regulatory arbitrage between the interbank and exchange-traded markets, as well as strengthen the power of regulators over agencies’ daily operations.

“This is good news, but it comes a bit too late,” he said.

In August, the CSRC and NAFMII punished Dagong Global Credit Rating Co Ltd, freezing its ratings business after the company provided pricey consultation services to firms for which it issued credit ratings.

China’s credit rating industry has a reputation for providing favourable ratings for local issuers, downplaying risks. (Reporting by Andrew Galbraith; Editing by Richard Borsuk)