ESMA, the direct supervisor of credit rating agencies (CRAs) in EU, has registered DBRS Ratings GmbH (DBRS RG) as a CRA under the CRA Regulation, with effect from December 14, 2018. DBRS RG is based in Germany and intends to issue sovereign and public finance ratings; structured finance ratings; and corporate ratings of financials and non-financials. DBRS RG belongs to a group of CRAs and intends to endorse ratings issued by third-country CRAs of the group, based in the United States and Canada. Those CRAs are registered by and are subject to the supervision of the respective local competent authorities.
The CRA Regulation seeks to ensure that credit ratings issued in the EU meet minimum standards of quality, transparency, and independence by providing that only companies registered by ESMA as CRAs may lawfully issue credit ratings. These credit ratings can be used for regulatory purposes by credit institutions, investment firms, insurance, and reinsurance undertakings, institutions for occupational retirement provision, management companies, investment companies, alternative investment fund managers, and central counterparties. To be registered as a CRA, a company must be able to demonstrate to ESMA that it complies with the requirements of the CRA Regulation, which covers the:
- Governance of CRAs and the management of conflicts of interest
- Development and application of methodologies for assessing credit risk
- Disclosure of information to ESMA and to market participants
Once registered, CRAs are subject to ongoing monitoring and supervision by ESMA to ensure that they continue to meet the conditions for registration. ESMA will impose sanctions and/or penalties where it finds that a CRA has failed to meet its obligations under the CRA Regulation. The total number of CRAs registered in the EU is 27 CRAs. Among the 27 registered CRAs, four operate under a group structure, totaling 19 legal entities in the EU, which means that the total number of CRA entities registered in EU is 42.
Keywords: Europe, EU, Banking, Securities, CRA, CRA Regulation, DBRS Ratings, ESMA
Previous ArticleHKMA Issues and Revises Reporting Forms Under the IRRBB Framework
APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.
ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.
BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.
ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.
ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).
ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).
EBA has decided to phase out the guidelines on legislative and non-legislative moratoria of loan repayments, in accordance with the earlier specified end of September deadline.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.