Brussels, 15/12/2010 (Agence Europe) - Following the recommendations of rapporteur Jean Paul Gauzès (EPP, France), the European Parliament recently approved by 611 to 15 (and 26 abstentions) amendments to make direct supervision of credit ratings agencies possible. Supervision will be carried out by the European Securities and Markets Authority (ESMA), which will be able to fine agencies up to 20% of their turnover. In its proposal, the European Commission gave itself the power to fine agencies following a recommendation to this effect from ESMA, but the EP has agreed with the Council of Ministers' line on this.
Following adoption of an EP amendment, ESMA will also be able to carry out spot checks at agency headquarters and require them to carry out comparisons with hindsight (comparing performance forecasts with a product's actual performance).
The EP was not, however, able to get its idea accepted of greater access to information by ratings agencies to boost competition and transparency but the European Commission is urged to unveil draft legislation to this effect all the same, and it might do so when it amends the legislation at the end of next year.
Credit rating agencies are once again in the European Parliament's hot seat. Discussing the draft regulation as unveiled by the European Commission, the rapporteur, French MEP Jean-Paul Gauzès (EPP) welcomed the Commission's proactive approach to ratings agencies in the light of their increased importance on the money markets. In 2009, the European Commission suggested rules for ratings agencies and the EP rapporteur stressed the need back then for joined-up supervision although it was not possible at that stage. Gauzès pointed out that the Commission was keeping its promises by unveiling the draft regulation and he hoped that the remaining issues, like sovereign debt, pay and bonuses and competition, would be addressed in an own initiative report in the first half of next year.
On behalf of the Council of Ministers, Olivier Chastel said that the draft regulation was an important step towards supervision and he welcomed the greater powers garnered to ESMA. EU Commissioner Michel Barnier said that the “good agreement” was another success story for the Belgian Presidency, and would have been an “excellent” agreement if the Commission's ideas on transparency had been included in the final compromise. The commissioner said people needed to be aware of the importance of this decision because it is the first time that ESMA has been given direct supervisory powers. It has been made the body responsible for registering and controlling ratings agencies and will be able to force them to abide by its rules, he added, with the power to make spot checks and levy fines on agencies not abiding by the EU regulation. Barnier said that work had to continue because it is not the ratings agencies themselves that cause the problems in the same way as it is not the thermometer that causes fever. He said he would be opening a broad consultation exercise in January 2011 on issues including boosting competition and diversity on this rigid market.
All the MEPs expressed agreement with strong, transparent supervision. Sebastian Bodu (EPP, Romania) said that supervision by ESMA should cover only securities and not bonds and shares (that do not endanger the financial system). Speaking on behalf of the S&D, Italy's Gianni Pittella called for ratings agencies to be prohibited from assessing sovereign debt, and for this power to be given to an EU institution, the European Court of Auditors, for example. The possibility of applying financial penalties was welcomed by Germany's Wolf Klinz (ALDE), who called for progress in other areas, like competitiveness and transparency. On behalf of the Greens/EFA, Germany's Sven Giegold pointed out that the know-how and independence of ESMA staff would be key. The draft regulation can count on approval by the ECR Group, announced the UK's Ashley Fox, expressing reservations about some of the secure website ideas put forward by the Commission. Michel Barnier assured him that he would be returning to these issues, along with the question of rating sovereign debt, raised by Irish Labour MEP Alan Kelly. Summing up, the commissioner said that the idea of dealing with ratings agencies in three stages (we are currently in the second stage) was working well. (L.G./transl.fl)