Brussels, 16/04/2009 (Agence Europe) - On Wednesday 15 April, the European Parliament and Council reached informal political agreement on the proposal for a regulation on the registration and supervision of credit rating agencies (see EUROPE 9868). “There was an agreement yesterday at the trialogue meeting,” Jean-Pauil Gauzès (EPP-ED, France) confirmed to EUROPE on Thursday. Gauzès, the EP rapporteur on this matter, said he was “satisfied” that the key points highlighted by the EP had been accepted. The agreement will be endorsed at the EP plenary session next week, which will vote on one single amendment to the text, thereby opening the way for the first reading adoption of the regulation only six months after the European Commission presented its initial proposal.
Contrary to the wishes of the MEPs on the economic and monetary affairs committee, the Committee of European Securities Regulators (CESR) will not register or supervise credit rating agencies established in the EU. The committee will provide the starting point for requests for authorisation, but it will be up to the competent authorities in member states where the agency wants to be established to make the final decision on whether to grant, refuse or withdraw authorisation. Colleges of national supervisors will, as the Council wanted, monitor agencies registered in the EU. This model, has, Gauzès said, been set up “temporarily”: the Commission will report by 1 July 2010 on whether it would be more appropriate for monitoring to be more European in nature, based on proposals by the de Larosière committee. This expert group, chaired by the former head of the Bank of France Jacques de Larosière de Champfeu suggested that the CESR become a European authority with coercive powers over national regulators. This authority would have responsibility for registering and supervising credit rating agencies (see EUROPE 9848).
On the use of ratings issued outside the EU, Gauzès provided “two possibilities”: - a European subsidiary of a major group (for example, Moody's, Standard & Poor's or Fitch) endorses ratings issued by another entity of the group in a third country, and assumes responsibility for it; - ratings by smaller credit rating agencies, not established in the EU, could be used in the EU on condition that the Commission deems the rules in the country of origin of the agency are equivalent to European legislation and a cooperation agreement exists between supervisors. A deadline of 10 months has been set for putting in place an equivalence system.
The compromise reached sets the rules on the requirement for agency analysts to change functions after a certain period of time. There is to be rotation every four years for chief analysts, every five years for other analysts and every seven years for credit approval committees. Ratings on structured products will have either to be differentiated from ratings on non-complex financial instruments or to be complemented with information on the risks inherent in this type of product. (M.B./transl.rt)