13 March 2006

Update on CESR’s dialogue with Credit Rating Agencies

Fitch Ratings Agency and Dominion Bond Rating Service Limited indicate their willingness to participate in CESR's voluntary framework to review their application of the IOSCO Code on Rating Agencies. In March 2005 CESR delivered its advice regarding the potential options to regulate Credit Rating Agencies. CESR proposed not to regulate the Credit Rating Agencies (CRAs) industry at an EU level for the time being, 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.

In December 2005, Moody’s and Standard and Poors’ had chosen to adhere to the voluntary framework. 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.

Fitch Ratings and Dominion Bond Rating Service Limited now have also expressed their desire to join the voluntary framework, and publishes the letters received from the two agencies in this document.

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