Featured Product

    ESMA Calls for Legislative Changes to Improve Access to Credit Ratings

    September 30, 2021

    The European Securities and Markets Authority (ESMA) published an opinion on how the access to, and use of, credit ratings can be improved in the European Union. In the opinion, ESMA highlights the difficulties experienced by users of credit ratings and recommends that the legislators should amend the Credit Rating Agencies (CRA) Regulation or take alternative legislative action to address these issues.

    At present, credit ratings are published on the websites of credit rating agencies and on the European Rating Platform or ERP. However, the usability of these credit ratings is severely limited, as the ratings cannot be accessed in a machine-readable format or downloaded in sufficient numbers to be used for regulatory purposes. Users mainly access and use credit ratings and related research reports through licenses for data feeds and platform services offered by other companies in the CRA groups. These companies are not subject to regulation, on top of which their licensing practices and their high fees raise investor protection and competitiveness concerns. Users of credit ratings have reported that the terms of the license agreements they must enter into to use credit ratings are subject to frequent changes and that they often need to enter into additional licenses to maintain a consistent level of data usage over time. Users also report an inability to negotiate the terms of access to data feeds and a lack of transparency in price increases.

    ESMA opines that legislative changes are needed to establish the conditions under which the credit ratings of CRAs can be accessed and used for regulatory reporting purposes. The CRA Regulation should be amended either to clarify how the primary distribution of credit ratings and ancillary services by CRAs’ affiliates (described in this Opinion) falls within its scope, or to require the credit ratings published on the websites of CRAs or the European Rating Platform to be accessible in machine-readable format and to be downloadable for use in regulatory reporting. ESMA also highlights that Article 11a of the CRA Regulation has not achieved its stated objective of improving the comparability of credit ratings available in the European Union. In the event that the legislators do not wish to make changes to the European Rating Platform, ESMA requests that the obligation for ESMA to maintain the European Rating Platform should be removed. ESMA notes that the concerns raised in this Opinion regarding the distribution of credit ratings to subscribers could also be addressed by the adoption of an alternative regulation at the European Union level; for example, this could require credit ratings to be published on the European Single Access Point in a format that allows the ratings to be accessed and used for regulatory reporting purposes.

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, Credit Ratings, CRA Regulation, Credit Rating Agencies, European Rating Platform, ERP, Opinion, CRA, Reporting, ESMA

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582