13 December 2005

CESR dialogue on CRA implementation of IOSCO code

The Committee of European Securities Regulators announced to start a dialogue with Credit Rating Agencies to review how the IOSCO code of conduct is being implemented. CESR already 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. Following CESR advice to the EU Commission, CESR proposed not to regulate at an EU level, but review how CRAs will implement the IOSCO code.

In summary, this framework includes three elements:

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;

an annual meeting between CESR and the CRAs will also be organised to discuss any issues related to implementation of the IOSCO Code; and

CRAs would provide an explanation to the national CESR member where any substantial incident occur with a particular issuer in its market.

CESR delivered its advice regarding the potential options to regulate Credit Rating Agencies in March 2005.

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.

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