FCA to be the UK Regulator of Credit Rating Agencies
FCA announced that it will become the UK regulator of the credit rating agencies (CRAs). Any legal person wishing to issue credit ratings in the UK for regulatory purposes on or after exit of the UK from EU will need to be registered or certified with FCA. In the event there is no ratified withdrawal agreement, FCA will assume responsibility for registering and supervising CRAs in the UK when the UK leaves the EU on March 29, 2019 (exit day).
The European Union (Withdrawal) Act 2018 (EUWA) will repeal the European Communities Act 1972, preserve existing UK laws that implement EU obligations, and convert existing EU law at the point of exit into the UK law. The EUWA allows for amendments to this retained EU legislation to ensure that it continues to operate effectively once the UK leaves EU. It is not intended to make policy changes, other than where appropriate to reflect the UK’s new position outside the EU. To support a smooth transition to the new regime for CRAs in the UK and to minimize disruption to the users of credit ratings, FCA announcement mentioned that the draft Credit Rating Agencies (Amendments etc.) (EU Exit) Regulations 2018 (CRAR SI) prescribes several transitional processes for existing CRAs. The draft CRAR SI introduces both a conversion and temporary registration regime available to CRAs wishing to issue ratings in the UK on or after exit day:
- Registration Conversion regime. This will allow CRAs incorporated in the UK and registered with ESMA under the CRA Regulation to notify FCA before exit day to convert their existing ESMA registration into a registration with FCA.
- Certification Conversion regime. CRAs certified with ESMA will be able to notify FCA before exit day to extend their certification to the UK.
- Temporary registration regime. This will offer temporary registration to CRAs that submit an advance application for registration with FCA before exit day, provided they are a UK incorporated entity and are part of the same group as a CRA with an existing ESMA registration.
For firms not making use of the above transitional processes, applications to register as a new CRA will be assessed in accordance with the usual procedures in the CRA Regulation, as brought into UK law under the EUWA. If the UK enters an implementation period after Brexit, EU law would remain applicable in the UK from March 29, 2019 until the end of December 2020, in accordance with the withdrawal agreement, and the CRAR SI will not have effect for the duration of the implementation period.
Related Links
Keywords: Europe, UK, Banking, Insurance, Securities, CRA, CRA Regulation, Brexit, CRA Regulation, FCA
Previous Article
FDIC Publishes Guide to Help with Third-Party Risk ManagementRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.