ESMA Publishes Responses to Consultation on Aspects of CRA Regulation
ESMA published the responses received to its consultation on draft guidelines on “as stringent as” notion in the CRA Regulation. The consultation was issued on March 27, 2018 and comment period ended on May 25, 2018. ESMA published responses from four institutions, three of which are credit rating agencies—namely, Rating-Agentur Expert RA GmbH, A.M. Best Europe-Rating Services Limited, and Moody's Investors Service Ltd. U.S. Chamber of Commerce, Center for Capital Markets Competitiveness, was the other respondent.
This consultation followed on from the updated Guidelines on endorsement (November 2017) and was in response to requests from the industry. The aim of the proposed supplementary guidance is two-fold:
- To provide clarity regarding the general principle, ESMA relies on when assessing whether an alternative requirement can be considered as stringent as a requirement set out in the CRA Regulation
- ESMA’s concrete assessment of a number of alternative internal requirements, which are in place in a third-country credit rating agency (CRA)
In the updated guidelines on endorsement, 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 CRA Regulation. 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 CRA Regulation 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 CRA Regualtion.
Related Link: Consultation and Responses
Keywords: Europe, EU, Securities, CRA Regulation, Endorsement Regime, Responses to Consultation, ESMA
Previous Article
Christopher Woolard of FCA on AI and Future of RegulationRelated Articles
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.
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.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards