Committee Of European Securities Regulators Announces A Call For Evidence On Credit Rating Agencies

CESR published today a call for evidence on credit rating agencies following receipt of a call for advice from the European Commission requesting technical advice which might assist in developing possible legislative measures if considered appropriate.

The call for technical advice from the European Commission is published as part of the Call for Evidence (Ref: CESR/04-394) (available on CESR’s website under ‘Consultations’). The call for technical advice identifies in particular four areas on which CESR should provide technical advice and these include:

• Handling of potential conflicts of interests within rating agencies;
• Transparency of rating agencies’ methodologies;
• The legal treatment of rating agencies’ access to inside information; and
• Concerns about the possible lack of competition in the market for provision of credit ratings.

CESR must provide its advice to the European Commission by 1st of April 2005. To develop the technical advice, CESR has formed an expert group to be chaired by Ms Ingrid Bonde, Director General of the Swedish Finansinspektionen. Javier Ruiz del Pozo from the CESR secretariat will act as rapporteur.

In developing CESR’s advice, CESR will co-ordinate closely with fellow regulators both within the EU in the form of the fellow regulatory banking committee (CEBS), and internationally, with the SEC through its more regularised and intensive dialogue announced by CESR on 4 June 2004. The expert group will be giving particular thought as to how CESR’s eventual advice might interact with existing EU legislation and in particular, the Market Abuse Directive (which will come into effect by the end of 2005). Furthermore, CESR will also seek to draw heavily on the useful groundwork laid down by IOSCO and the Basle Committee.

A timetable for CESR’s work in this area can be viewed on clicking here (and can also be found in the Call for Evidence).

Responses to the call for evidence can be submitted online by 27 August 2004 through CESR’s website (www.cesr-eu.org) under the section ‘Consultations’.