The European Commission has published a consultation on credit rating agencies. The purpose of the consultation is to gather opinion on certain matters not covered by Regulation (EC) No 1060/2009 on credit rating agencies.
Credit rating agencies (CRAs) play a significant role in today's financial markets. They issue credit worthiness opinions that help overcome the information asymmetry between those
Issuing debt instruments and those investing in these instruments. CRAs have a major
impact on the financial markets. It is essential, therefore, that they consistently provide high quality, independent and objective credit ratings.
For this purpose Regulation (EC) No 1060/2009 on credit rating agencies (CRA Regulation)
was adopted in 2009 to introduce mandatory registration and on-going supervision for all
credit rating agencies operating in the European Union.
However, some issues related to credit rating activities have not been addressed in the CRA Regulation. Those issues relate to the risk of overreliance on credit ratings by financial market participants, the high degree of concentration in the credit rating sector, the civil liability of credit rating agencies and the remuneration models used by credit rating agencies.
The CRA Regulation requires the European Commission to monitor these issues and make
an assessment by end of 2012.
For complete report on public consultation see here.
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