The Board of Appeal of the European Supervisory Authorities upheld a decision by the European Securities and Markets Authority (ESMA) refusing to register a firm as a credit rating agency. This is the first appeal against a decision by ESMA refusing an applicant registration as a credit rating agency. ESMA is the primary regulator of credit rating agencies in the European Union.
In its decision, the Board of Appeal unanimously decided that the appeal should be dismissed, and that ESMA’s refusal decision should be confirmed. It stated that it accepted the firm’s point that the registration of a credit rating agency by ESMA is a new process, and recognized that the procedures will to an extent take time fully to work out. Nevertheless, because of the responsibilities placed on credit rating agencies and their importance in the financial system generally, the Board said that the onus must be on an applicant to satisfy ESMA that the relevant requirements are met. The application and its contents must be very clear, and it is not ESMA’s responsibility as regulator to remedy deficiencies.