In overall terms, the US legal and supervisory framework is broadly equivalent to the EU regulatory regime for credit rating agencies. CESR criterion is based on the integrity, transparency, good governance and reliability of the credit rating activities.
This document sets out the technical advice of CESR in relation to the equivalence between the US legal and supervisory framework and the EU regulatory regime for credit rating agencies, in accordance with the European Commission’s mandate of 12th June 2009.
CESR concludes that, overall, the US legal and supervisory framework is broadly equivalent to the
EU regulatory regime for credit rating agencies in terms of achieving what CESR considers to be the overall objective of:
“assuring that users of ratings in the EU would benefit from equivalent protections in
terms of the credit rating agencies integrity, transparency, good governance and
reliability of the credit rating activities”.
However, there are a number of differences between the US legal and supervisory framework and the EU regulatory regime as set out below and explained in detail in this advice, that mainly relate to the issue of disclosure of credit ratings and the quality of credit ratings and credit rating methodologies.
CESR recommends the identified differences be addressed to allow for further convergence between both regimes and considers that reducing the difference may be achieved by future regulatory amendments to the Securities and Exchange Commission’s (SEC) rules.
In coming to this conclusion, CESR has grouped the requirements of the EU Regulation into seven areas, in relation to each of which CESR has assessed the ability of the US legal and supervisory framework to achieve the main objectives of the relevant EU requirements. CESR considers the US system to be stronger in some areas and weaker in others in terms of ability to achieve the relevant objectives.
In accordance with the mandate, CESR has not taken into account any consideration of a political nature.
These seven areas are:
1. The scope of the regulatory and supervisory framework
2. Corporate Governance
3. Conflicts of interest management
4. Organisational requirements
5. Quality of methodologies and quality of ratings
6. Disclosure
7. Effective supervision and enforcement.
© CESR - Committee of European Securities Regulators
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