Sunday, December 08, 2013

ESMA Hints at Possible Enforcement Action over Credit Rating Agency Sovereign Ratings

The European Securities and Markets Authority (ESMA), the direct  regulator of credit rating agencies in the European Union, has identified a number of deficiencies in the processes for producing and issuing sovereign ratings at the three largest rating agencies, Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. The report found need for improvement in the areas of independence and avoidance of conflicts of interests; confidentiality of sovereign rating information; timing of publication of rating actions; and resources allocated to sovereign ratings. ESMA has not yet determined whether any of the findings in the report constitute a breach of the provisions of the CRA Regulation. But ESMA kept open the possibility of further investigations which could lead to enforcement actions.




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