Brussels, 07/07/2008 (Agence Europe) - On Tuesday 8 July, European Finance Ministers will take stock of the implementation of European roadmaps on financial stability and beefing up the supervisory framework for cross-border financial institutions (see EUROPE 9660). In conclusions on the transparency of financial markets, they will support Commission moves to introduce a European registration system for credit rating agencies.
According to a provisional version of the conclusions to be adopted, the Ecofin Council says it supports the principle set out by the Commission for a European Union accreditation system for rating agencies. Seeking to increase competition on the credit rating market through the arrival of new players in the market, it says it awaits with interest the concrete proposals to be brought forward by the Commission in autumn 2008.
In coming to this conclusion, European Finance Ministers feel that the efforts made by the International Organisation of Securities Commissions (IOSCO) are good, but do not go far enough. The IOSCO, an international organisation bringing together the main national stock exchange regulators, has reviewed its own code of conduct for rating agencies. This code “has not produced the desired effects” and the additional measures taken by the agencies themselves have not been enough, said Internal Market Commission Charlie McCreevy at a conference on European financial regulation following the international credit crunch, in Dublin on 4 July 2008. He reiterated that he believed European regulation was necessary to tackle the main problems inherent to credit rating agencies (see EUROPE 9683).
Following the US subprime crisis, credit rating agencies have been accused of not informing investors quickly enough of the dangers carried by players who had been affected by the financial crisis. Their economic model has also been criticised, with remuneration dependent on companies which ask for a rating. It is a situation that lends itself to conflicts of interest. (M.B./transl.rt)