Brussels, 20/02/2015 (Agence Europe) - The European Securities Markets Authority (ESMA) examines the supervision of credit rating agencies and centralised trade repositories for derivative trades in its annual report for 2014, published on Monday 16 February.
In 2014, ESMA received seven authorisation requests from credit rating agencies (CRAs). Two of them, EuroRating Sp. z.o.o. in Poland and Moody's Investors Service EMEA Limited in the United Kingdom, were given approval, two were rejected and three others were still under examination at the end of 2014. ESMA currently directly supervises 27 credit rating agencies. “ESMA intends to investigate the practices of the 3 largest CRAs in this area during 2015-16 to fully identify and understand the risks in their internal IT control environments,” it explains in the report, adding: “In order to ensure the confidentiality, integrity and availability of the information underpinning the ratings process, CRAs need to have effective internal processes, controls and information security measures in place as well as the staff to develop, implement and oversee them.”
Under the EMIR Regulation 648/2012, ESMA directly controls trade repositories (TRs) of transactions involving derivatives - both on regulated platforms and over-the-counter - which national and European regulators have access to. Since February 2014, a total of almost 10 billion reports have been received and processed by the six EU trade repositories. “Data quality is a serious concern and needs to be improved to enable public authorities to monitor effectively risks in the derivatives markets,” notes ESMA, explaining: “TRs (and also the reporting entities) will need to overcome some of the initial difficulties of the new, complex and voluminous reporting and ensure that their systems are set up to deal with this data flow effectively.” (Mathieu Bion)