Featured Product

    ESMA on Endorsement of UK Credit Ratings in Case of No-Deal Brexit

    March 15, 2019

    ESMA has set out the implications of Brexit for credit rating agencies (CRAs) based in UK, including the endorsement of UK credit ratings, in case of a no-deal Brexit. In a no-deal Brexit scenario, UK-based CRAs will no longer meet the conditions for registration and their registrations will be withdrawn changing their status to third-country CRAs. In this event, the outstanding credit ratings of UK-based CRAs will only continue to be usable for regulatory purposes in EU if the credit ratings are endorsed by a CRA that is located in an EU member state (EU27 CRA).

    Most UK-based CRAs have taken the necessary steps to prepare for the endorsement regime. An EU27 CRA must notify ESMA of its intention to endorse credit ratings from the UK-based CRA. ESMA supervises seven UK-based CRAs—AM Best Europe-Rating Services Ltd, DBRS Ratings Limited, Fitch Ratings Limited, Fitch Ratings CIS Limited, Moody’s Investors Service Ltd, Moody’s Investors Service EMEA Ltd, and The Economist Intelligence Unit Ltd. As of March 15, 2019, all UK-based CRAs, except The Economist Intelligence Unit Ltd, have taken steps to ensure that an EU27 CRA is willing and able to endorse its credit ratings in a no-deal Brexit scenario.

    For a credit rating issued by a third-country CRA to be endorsed by an EU27 CRA, the CRA Regulation requires a set of strict conditions to be met. Some of these conditions relate to the legal and supervisory framework in the third country while other conditions relate to the EU27 and third-country CRAs that wish to make use of the endorsement regime. ESMA has completed an assessment of the legal and supervisory framework for CRAs foreseen by the UK statutory instrument 226 of February 13, 2019, which will take effect on the date of Brexit, in a no-deal Brexit scenario. It is also a condition for endorsement that ESMA has a cooperation agreement with the supervisory authority of the UK. This condition is met by the memorandum of understanding that was agreed on February 01, 2019 and will take effect on the date of Brexit, in a no-deal Brexit scenario. 

     

    Related Links

    Keywords: Europe, EU, UK, Banking, Securities, Brexit, No-Deal Brexit, CRA Regulation, EU27 CRA, UK-Based CRA, CRA, ESMA

    Related Articles
    News

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    MAS Amends Notice on Related Party Transactions of Banks

    MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.

    April 08, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Euro Short-Term Rate

    ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.

    April 07, 2021 WebPage Regulatory News
    News

    EBA Consults on Standards Related to FRTB-SA

    EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).

    April 07, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules Related to IRB Approach for Credit Risk

    PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.

    April 07, 2021 WebPage Regulatory News
    News

    BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK

    The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks

    FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks

    OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.

    April 06, 2021 WebPage Regulatory News
    News

    EU Amends CRR and Securitization Regulation in Response to Pandemic

    To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).

    April 06, 2021 WebPage Regulatory News
    News

    HM Treasury Announces G7 Agreement on Green Agenda Ahead of COP26

    HM Treasury announced that G7 Finance Ministers and Central Bank Governors met ahead of COP 26, the 2021 UN Climate Change Conference, and agreed on green agenda.

    April 06, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6821