On 30 March 2005, at the request of the European Commission, CESR delivered its advice (CESR/05-139b) regarding the potential options to regulate Credit Rating Agencies. In its advice, CESR proposed not to regulate the Credit Rating Agencies (CRAs) industry for the time being, at an EU level and instead, proposed that a pragmatic approach should be adopted to keep under review how CRA’s would implement the standards set out in the IOSCO Code of Conduct. CESR therefore intends to develop this strategy on the basis of voluntary participation from CRAs. In addition, CESR will continue to monitor developments related to CRAs (in particular, the new rules provided by the Capital Requirements Directive) and issues impacting investors and issuers.
CESR has discussed with Moody’s and Standard and Poor’s the process to review implementation of the IOSCO code and has outlined a voluntary framework of co-operation between CESR and CRAs. In summary, this framework includes three elements: (i) an annual letter from each CRA will be sent to CESR, and will be made public, outlining how it has complied with the IOSCO Code and indicating any deviations from the Code; (ii) an annual meeting between CESR and the CRAs will also be organised to discuss any issues related to implementation of the IOSCO Code; and (iii) CRAs would provide an explanation to the national CESR member where any substantial incident occur with a particular issuer in its market.
CESR is publishing today, in the document, the letters sent to the abovementioned CRAs summarising the discussion held with them along with their responses. CESR would welcome any other CRAs which would fall within the scope of the IOSCO Code and operating in the EU markets that wish to adhere to this voluntary framework, to indicate their interest to the CESR secretariat. For further information, please contact Javier Ruiz del Pozo via email at jruiz@cesr-eu.org or by phone +34 91 585 16 37.
