Copenhagen, 02/04/2012 (Agence Europe) - Danish Economy Minister Margrethe Vestager explained on Saturday 31 March as she emerged from the ECOFIN Council that many member states have huge concerns about the European Commission's plans to enforce a rotation of credit rating agencies. In order to meet these concerns, arising from the small size of the international ratings market and small number of agencies, measures need to be found, she said, that were feasible in reality and took account of the duration and number of ratings issued before rating agencies must move on.
In its most recent draft compromise, the Danish Presidency suggests that rotation should be required, but after a longer period than the three years suggested by the Commission. France is greatly in favour of compulsory rotation, as is Italy, but is flexible about the idea of forcing companies that want a rating to be forced to issue a bid for tender among rating agencies. In a public statement issued after the ECOFIN Council, EU Internal Market Commissioner Michel Barnier said that the idea behind the Commission's suggestion of a rotation of agencies was to introduce competition and deal with conflicts of interest in the issuing of ratings (see EUROPE 10495). He said that rotation was an area of the proposals on which the Commission was open to new suggestions but it would not budge over the need for greater competition and diversity, although it would be flexible about how this was actually introduced.
Ratings issued outside the EU. Vestager said that the member states had agreed not to alter the existing rules on the equivalence of credit ratings issued outside the EU, despite requests to the contrary from some member states. She said the Danish Presidency would not be arranging talks on the rules. The European Commission and the European Securities and Markets Authority (ESMA) have been asked to ensure that the current rules are operating properly. Based on a decision on equivalence of rules by ESMA, credit ratings issued in the United States, Canada, Singapore and Hong-Kong can be used without restriction within the European Union. Barnier said that Europe was open to the rest of the world and wants a convergence of the rules around the world to ensure a global playing field.
From April 2012 onwards, European legislation will enable ESMA to force rating agencies registered in the EU to pay a set fee to cover the cost of registration. This is the first financial contribution to ESMA's running costs from private sources. (MB/transl.fl)