March 27, 2018

ESMA proposed supplementary guidance on the application of the endorsement regime. This consultation follows on from the updated guidelines on endorsement, which were published in November 2017, and comes in response to requests from the industry. ESMA proposes to add the supplementary guidance as an additional subsection of its updated guidelines on endorsement, which will apply to credit ratings issued after January 01, 2019 or reviewed after that date. The consultation will close on May 25, 2018.

The supplementary guidance proposed in this consultation paper aims to provide clarity about the general principle ESMA relies on when assessing whether an alternative internal requirement can be considered as stringent as a requirement set out in Credit Rating Agency Regulation (CRAR). Furthermore, the proposed guidance intends to provide transparency and certainty about areas in which third-country Credit Rating Agencies (CRAs) are not already fulfilling the EU requirements.

In the updated guidelines on endorsement which ESMA published in November 2017, ESMA had clarified that compliance with the third-country legal framework will no longer be considered proof that a third-country CRA fulfills requirements that are at least as stringent as those set out in the CRAR. Instead, an endorsing CRA has two options to demonstrate to ESMA that the "as stringent as" condition is met: either stating that the third-country CRA complies with the relevant provisions of CRAR or stating that the third-country CRA has established and fulfills alternative internal requirements, which are at least as stringent as the relevant endorsement provisions of CRAR.


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Comment Due Date: May 25, 2018

Keywords: Europe, EU, Securities, Supplementary Guidance, Endorsement Regime, CRA Regulation, ESMA

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