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.