Brussels, 05/05/2014 (Agence Europe) - The European Commission argues in a report on Monday 5 May on the feasibility of a network of small credit ratings agencies to break the monopoly of the Big Three that setting up such a network would not be feasible in the short term. It examined the idea of a network of small agencies, along with the development of a common data platform for underlying information used for developing ratings, design and use of common methodologies, sharing of expert knowledge and best practices on a wide range of topics, such as internal controls, investor education, communication, methodologies and legal compliance. The Commission's report will be forwarded to the European Parliament and Council of the EU. It not only identifies a number of obstacles to the establishment of an integrated network as well as some obstacles limiting the potential scope of a cooperation network, reveals that there is no support and ownership among industry representatives to establish, under current conditions, any form of network of smaller credit rating agencies. The Big Three currently share 90% of global turnover in the credit rating market. Small rating agencies have expressed a need for a structured dialogue or forum with the European Commission to discuss the state of the market and regulation. The Commission is therefore suggesting the establishment of a periodic dialogue on market developments and issues relating to regulation of credit rating agencies as the most proportionate solution in the short term.
Taking account of the outcome of discussions on a dialogue with agencies and assessment of the effect of the measures adopted in a EU regulation that came into force in June 2013, the Commission will at a later stage assess the value-added of a network of small credit rating agencies. (EL)