Featured Product

    ESMA Clarifies Endorsement Regime for Third-Country Credit Ratings

    November 17, 2017

    ESMA published the final report updating its guidelines on the application of the endorsement regime under the Credit Rating Agencies (CRA) Regulation. The guidelines on the application of the endorsement regime will take effect on January 01, 2019. ESMA also published its final report on Technical Advice on CRA regulatory equivalence—CRA 3 update. CRA 3 will enter into force on June 01, 2018 for the purposes of endorsement and equivalence.

    The report on the application of endorsement regime details a number of changes and clarifications to the existing guidelines. The updates focus on the obligations of the endorsing CRA, the conduct of the third-country CRA, and the third-country legal and supervisory framework. The report also clarifies ESMA’s supervisory powers over endorsed credit ratings and the notion of objective reasons. The effective date of January 01, 2019 for the endorsement regime will allow CRAs sufficient time to adapt policies and procedures to take into account ESMA’s additional guidance on the requirements, which are as stringent as EU requirements that are to be developed by ESMA in 2018. The final report on the Technical Advice to the EC assesses the legal and supervisory framework of the nine jurisdictions (Argentina, Australia, Brazil, Canada, Hong Kong, Japan, Mexico, Singapore, and United States), which until now have been eligible for equivalence and endorsement.

    The entry into force of the 2013 amendments to the CRA Regulation (CRA 3), and the associated introduction of new requirements to endorsed ratings in 2018, provided an opportunity for ESMA to review the regime more broadly. Endorsement is a regime under the CRA Regulation, which allows credit ratings issued by a third-country CRA, and endorsed by an EU CRA, to be used for regulatory purposes in the EU. Endorsement is used by the largest CRAs in the EU. Equivalence allows a non-systemic CRA without any physical presence in the EU to be certified by ESMA. At present, four certified CRAs located in three non-EU jurisdictions rely on this regime. ESMA has concluded that the local legal and supervisory frameworks of these three jurisdictions, as well as those of Canada and Hong Kong, meet the objectives of the additional CRA 3 requirements for the purposes of equivalence. The countries whose legal and supervisory frameworks were assessed as not fully meeting the requirements are Argentina, Australia, Brazil and Singapore. However, the CRAs established in these jurisdictions currently rely only on the endorsement regime—not on equivalence.

     

    Related Links

    Keywords: Europe, EU, Securities, CRA 3, CRA Regulation, Equivalence, Endorsement Regime, ESMA

    Related Articles
    News

    PRA Revises Branch Return and Updates Guidance for Regulatory Reports

    PRA published the policy statement PS17/19, which contains the final policy related to changes in the format and content of the Branch Return Form and reporting guidance.

    September 12, 2019 WebPage Regulatory News
    News

    FINMA Outlines Treatment of Stablecoins in Supplement to Guide on ICO

    FINMA published a supplement to its initial coin offerings (ICOs) guidelines, outlining the treatment for stablecoins under the Swiss supervisory law.

    September 11, 2019 WebPage Regulatory News
    News

    Ursula von der Leyen Presents Structure of Next European Commission

    President-elect Ursula von der Leyen has presented her team and the new structure of the next European Commission.

    September 10, 2019 WebPage Regulatory News
    News

    FED Proposes to Revise and Extend Reporting Form on Systemic Risk

    FED proposed to extend for three years, with revision, the Banking Organization Systemic Risk Report (FR Y-15; OMB No. 7100-0352).

    September 10, 2019 WebPage Regulatory News
    News

    EBA Issues Revised List of Validation Rules for Reporting

    EBA published the revised list of validation rules (version 2.9) in its implementing technical standards on supervisory reporting.

    September 10, 2019 WebPage Regulatory News
    News

    Bundesbank Publishes Supplementary Validation Rules for Reporting

    Bundesbank published the updated document containing supplementary validation rules in the context of the implementation of the reporting system at national level.

    September 10, 2019 WebPage Regulatory News
    News

    APRA Licenses Xinja Bank as Authorized Deposit-Taking Institution

    APRA granted Xinja Bank Limited a license to operate as an authorized deposit-taking institution without restrictions, under the Banking Act 1959.

    September 09, 2019 WebPage Regulatory News
    News

    FDIC Proposes Revisions to Regulations on Interest Rate Restrictions

    FDIC proposed revisions to its regulations covering interest rate restrictions that apply to less than well-capitalized insured depository institutions.

    September 09, 2019 WebPage Regulatory News
    News

    EBA Intends to Clarify End-Treatment of Grandfathered Instruments

    EBA announced its intention to clarify the prudential treatment applicable to own funds instruments at the end of the grandfathering period, which expires on December 31, 2021.

    September 09, 2019 WebPage Regulatory News
    News

    IMF Releases Reports on 2019 Article IV Consultation with Saudi Arabia

    IMF published its staff report and selected issues report in context of the 2019 Article IV consultation with Saudi Arabia.

    September 09, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3799