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ECON endorsed the report on Credit Rating Agencies drafted by Jean Paul Gauzes adopting amendments aimed at enhance the transparency, independence and good governance of CRAs.
ECON calls for CESR to become the only registration and supervisory body over European rating agencies. CESR should be in charge of registering CRAs, checking their compliance with the rules and ultimately withdrawing an agency's registration should the rules be breached. It would also be in charge of monitoring CRAs' past performance and publishing statistical data on the reliability of ratings issued.
The Committee agreed on a rotation mechanism that will have to be put in place to ensure that CRA analysts who are in direct contact with the rated entity, elaborate ratings for the same organisation for longet than five years. ECON also agreed that each CRA must disclose the compensation arrangements with its clients.
MEPs also call for an independent non-profit EU rating agency to be founded by the EU, the European finance industry and by the rated entities. The Commission should come forward the requisite legislative proposal.
Finally, non-European ratings will have to be endorsed by an EU agency, unless the third country rating complies with equivalent criteria to those provided by this legislation. A list of third-country legislation considered equivalent to the proposed EU regime will be prepared and regularly updated by the Commission.